PRATTS'  DIGEST 


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A.  S.  PRATT  &  SONS, 
NATIONAL    BANK    AGENTS, 

WASHINGTON     D.  C. 


PRATTS'   DIGEST 


NATIONAL  BANK  ACT 


AND      OTHER 


LAWS  RELATING  TO  NATIONAL  BANKS 


FROM      THE 


REVISED    STATUTES    OF    THE    UNITED    STATES, 


AMENDMENTS  AND  ADDITIONAL  ACTS, 


TO    WHICH    IS    APPENDED 

Information  How  to  Proceed  in  Organizing  National  Banks. 


RULES  AND  REGULATIONS  GOVERNING   THE   REDEMPTION  OF 
UNITED   STATES  AND  NATIONAL  BANK  NOTES,  AND  CIRCU- 
LARS   ISSUED  BY  THE   TREASURY    OFFICIALS   OF 
INTEREST  TO  BANKERS. 


>»  rb«,  ' 


EDITION     OF    1886. 
Revised    to  June    1st,  1887". 


PREPARED  AND   PUBLISHED   BY 

A.  S.  PRATT  &  SONS, 
NATIONAL    BANK    AGENTS, 

WASHINGTON,    D.  C. 


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#  -y* 


Entered  according  to  Act  of  Congress,  in  the  year  1SS6,  by 

A.  S.  Pratt   &   Sons, 

In  the  Office  of  the  Librarian  of  Congress,  at  Washington,  D.  C. 


PRESS    OF 
THOMAS     MCGlLL    &.    CO. 


PREFACE, 


The  original  Act  creating  the  National  banking  system 
bears  date  February  25th,  1863.  This  Act  was  superseded 
and  modified  by  the  Act  of  June  3d,  1864,  which  was  amend- 
ed from  time  to  time  by  various  Acts  until  December,  1873, 
when  all  the  statutes  of  the  United  States  were  -revised  and 
embodied  in  what  are  now  known  as  the  Revised  Statutes 
of  the  United  States.  Such  Revised  Statutes,  therefore, 
contain  all  laws  relating  to  National  banks  except  those 
which  have  been  enacted  since  December,  1873. 

Several  of  the  Acts  passed  since  the  latter  date  are,  how- 
ever, of  the  utmost  importance,  as  they  materially  modified 
the  law  previously  existing. 

The  following  is  a  compilation  of  the  sections  of  the 
Revised  Statutes  of  the  United  States,  containing  the  laws 
relating  to  National  banks,  to  which  have  been  added  the 
Acts  having  reference  to  the  same  passed  since  December, 
1873.  Appended  to  each  section  will  be  found  references 
to  decisions  of  the  courts,  in  which  the  provisions  of  said 
section  have   been  commented    on  or  construed. 


w*'vejt8rry 


REVISED   STATUTES  OF  UNITED  STATES 


RELATING    TO 


NATIONAL   BANKS, 

WITH  AMENDMENTS  AND  ANNOTATIONS. 


CHAPTER   I. 
THE   COMPTROLLER   OF  THE   CURRENCY. 


1.  Bureau  of  Comptroller  of  the  Currency. 
Section  324. — There  shall  be  in  the  Department  of  the 
Treasury  a  Bureau  charged  with  the  execution  of  all  laws 
passed  by  Congress  relating  to  the  issue  and  regulation  of  a 
National  currency  secured  by  United  States  bonds;  the  chief 
officer  of  which  Bureau  shall  be  called  the  Comptroller  of 
the  Currency,  and  shall  perform  his  duties  under  the  general 
direction  of  the  Secretary  of  the  Treasury. 

Kennedy  v.  Gibson,  8  Wall.,  498 ;  Piatt  v.  Beebe,  57  N.  Y.,  339 ;  Charleston  v. 
People's  National  Bank,  5  S.  C,  103;  Case  v.  Terrill,  11  Wall.,  199;  United  States 
ex  rel.  White  v.  Knox,  102  U.  S. 

2.  Comptroller  of  the  Currency. 
Section  325. — The  Comptroller  of  the  Currency  shall  be 
appointed  by  the  President,  on  the  recommendation  of  the 
Secretary  of  the  Treasury,  by  and  with  the  advice  and  con- 
sent of  the  Senate,  and  shall  hold  his  office  for  the  term  of 
five  years  unless  sooner  removed  by  the  President,  upon  rea- 
sons to  be  communicated  by  him  to  the  Senate  ;  and  he  shall 
be  entitled  to  a  salary  of  five  thousand  dollars  a  year. 

The  Comptroller  of  the  Currency  is  also  ex  officio  Commissioner  of  the  Freedmen'3 
Savings  Bank,  and  for  this  receives  an  additional  $1000  per  annum. 


3.  Oath  and  Bond  of  Comptroller. 
Section  326. — The  Comptroller  of  the  Currency  shall, 
within  fifteen  days  from  the  time  of  notice  of  his  appoint- 
ment, take  and  subscribe  the  oath  of  office ;  and  he  shall  give 
to  the  United  States  a  bond  in  the  penalty  of  one  hundred 
thousand  dollars,  with  not  less  than  two  responsible  sureties, 
to  be  approved  by  the  Secretary  of  the  Treasury,  conditioned 
for  the  faithful  discharge  of  the  duties  of  his  office. 

4.    Deputy  Comptroller :  Duties,  &e. 

Section  327. — There  shall  be  in  the  Bureau  of  the  Comp- 
troller of  the  Currency  a  Deputy  Comptroller  of  the  Currency, 
to  be  appointed  by  the  Secretary,  who  shall  be  entitled  to  a 
salary  of  two  thousand  five  hundred  dollars  a  year,  and  who 
shall  possess  the  power  and  perform  the  duties  attached  by 
law  to  the  office  of  Comptroller  during  a  vacancy  in  the  office 
or  during  the  absence  or  inability  of  the  Comptroller.  The 
Deputy  Comptroller  shall  also  take  the  oath  of  office  prescribed 
by  the  Constitution  and  laws  of  the  United  States,  and  shall 
give  a  like  bond  in  the  penalty  of  fifty  thousand  dollars. 

It  has  been  held  that  when  the  Deputy  Comptroller  of  the  Currency  acts  in  the 
absence  or  disability  of  the  Comptroller  he  must  sign  as  Deputy  and  Acting  Comp- 
troller, to  secure  the  validity  of  papers. 

5.  Clerks. 
Section  328. — The  Comptroller  of  the  Currency  shall  em- 
ploy, from  time  to  time,  the  necessary  clerks,  to  be  appointed 
and  classified  by  the  Secretary  of  the  Treasury,  to  discharge 
such  duties  as  the  Comptroller  shall  direct. 

While  this  section  retains  the  appointing  power  in  the  hands  of  the  Secretary  of 
the  Treasury,  it  appears  to  indicate  that  the  Comptroller  was  to  be  the  judge  of  the 
force  necessary  to  perform  the  work  of  his  office. 

6.  Interest  in  National  Banks  Prohibited. 

Section  329. — It  shall  not  be  lawful  for  the  Comptroller  or 
the  Deputy  Comptroller  of  the  Currency,  either  directly  or 
indirectly,  to  be  interested  in  any  association  issuing  National 
currency  under  the  laws  of  the  United  States. 

The  spirit  of  this  section  is  plain, ,but  under  its  strict  letter  there  is  nothing  to 
prevent  either  the  Comptroller  or  the  Deputy  from  being  interested  in  National 
banks  so  long  as  the  particular  banks  in  which  they  are  interested  do  not  issue 
currency. 


7.  Seal  of  Office. 
Section  330. — The  seal  devised  by  the  Comptroller  of  the 
Currency  for  his  office,  and  approved  by  the  Secretary  of  the 
Treasury,  shall  continue  to  be  the  seal  of  office  of  the  Comp- 
troller, and  may  be  renewed  when  necessary.  A  description 
of  the  seal,  with  an  impression  thereof,  and  a  certificate  of  ap- 
proval of  the  Secretary  of  the  Treasury,  shall  be  filed  in  the 
office  of  the  Secretary  of  State. 

See  also  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  97. 

8.  Rooms,  Vaults,  &c,  for  Bureau. 
Section  331. — There  shall  be  assigned  from  time  to  time, 
to  the  Comptroller  of  the  Currency,  by  the  Secretary  of  the 
Treasury,  suitable  rooms  in  the  Treasury  building  for  conduct- 
ing the  business  of  the  Currency  Bureau,  containing  safe  and 
secure  fire-proof  vaults,  in  which  the  Comptroller  shall  deposit 
and  safely  keep  all  the  plates  not  necessarily  in  the  possession 
of  engravers  or  printers,  and  other  valuable  things  belonging 
to  his  Department;  and  the  Comptroller  shall  from  time  to 
time  furnish  the  necessary  furniture,  stationery,  fuel,  lights, 
and  other  proper  conveniences  for  the  transaction  of  the  busi- 
ness of  his  office. 

9.  Examination  of  Banks  in  District  of  Columbia. 
Section  332. — The  Comptroller  of  the  Currency,  in  addition 
to  the  powers  conferred  upon  him  by  law  for  the  examination 
of  National  banks,  is  further  authorized,  whenever  he  may 
deem  it  useful,  to  cause  examination  to  be  made  into  the  con- 
dition of  any  bank  in  the  District  of  Columbia  organized  under 
Act  of  Congress.  The  Comptroller,  at  his  discretion,  may  re- 
port to  Congress  the  results  of  such  examination.  The  ex- 
pense necessarily  incurred  in  any  such  examination  shall  be 
paid  out  of  any  appropriation  made  by  Congress  for  special 
bank  examinations. 

10.  Annual  Report  of  Comptroller. 

Section  333. — The  Comptroller  of  the  Currency  shall  make 
an  annual  report  to  Congress,  at  the  commencement  of  its 
session,  exhibiting — 

First.   A  summary  of  the  state  and  condition  of  every  asso- 


ciation  from  which  reports  have  been  received  the  preceding 
year,  at  the  several  dates  to  which  such  reports  refer,  with  an 
abstract  of  the  whole  amount  of  banking  capital  returned  by 
them,  of  the  whole  amount  of  their  debts  and  liabilities,  the 
amount  of  circulating  notes  outstanding,  and  the  total  amount 
of  means  and  resources,  specifying  the  amount  of  lawful  money 
held  by  them  at  the  times  of  their  several  returns,  and  such 
other  information  in  relation  to  such  associations  as,  in  his 
judgment,  may  be  useful. 

Second.  A  statement  of  the  associations  whose  business  has 
been  closed  during  the  year,  with  the  amount  of  their  circula- 
tion redeemed  and  the  amount  outstanding. 

Third.  Any  amendment  to  the  laws  relative  to  banking  by 
which  the  system  may  be  improved  and  the  security  of  the 
holders  of  its  notes  and  other  creditors  may  be  increased. 

Fourth.  A  statement  exhibiting  under  appropriate  heads  the 
resources  and  liabilities  and  condition  of  the  banks,  banking 
companies,  and  savings  banks  organized  under  the  laws  of  the 
several  States  and  Territories,  such  information  to  be  obtained 
by  the  Comptroller  from  the  reports  made  by  such  banks, 
banking  companies,  and  savings  banks  to  the  legislatures  or 
officers  of  the  different  States  and  Territories,  and,  where  such 
reports  cannot  be  obtained,  the  deficiency  to  be  supplied  from 
such  other  authentic  sources  as  may  be  available. 

Fifth.  The  names  and  compensation  of  the  clerks  employed 
by  him  and  the  whole  amount  of  the  expenses  of  the  banking 
department  during  the  year. 

See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  97. 

The  first  report  of  the  Comptroller  of  the  Currency  was  made  for  the  year  1863 
by  the  Hon.  Hugh  McCulloch,  the  first  Comptroller.  The  earlier  reports  are  out 
of  print,  and  those  of  some  of  the  later  years  also,  but  copies  of  such  as  are  on 
hand  and  can  be  spared  may  be  obtained  on  application  to  the  Comptroller  of  the 
Currency  by  bankers  and  others  who  are  interested  in  banking  matters. 

11.  When  Report  May  be  Printed. 

Section  3811. — When  the  annual  report  of  the  Comptroller 
of  the  Currency  upon  the  National  banks  and  banks  under 
State  and  Territorial  laws  is  completed,  or  while  it  is  in  pro- 
cess of  completion,  if  thereby  the  business  may  be  sooner  dis- 
patched, the  work  of  printing  shall  be  commenced,  under  the 


superintendence  of  the  Secretary,  and  tne  whole  shall  be 
printed  and  ready  for  delivery  on  or  before  the  first  day  of  De- 
cember next  after  the  close  of  the  year  to  which  the  report 
relates. 

See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page97. 

The  reports  of  heads  of  Departments  are,  as  a  rule,  made  to  the  President  of  the 
United  States ;  the  only  exception  is  that  of  the  Secretary  of  the  Treasury  Depart- 
ment, which  is  made  direct  to  Congress.  The  reports  of  heads  of  bureaus  in  any 
Department  are  usually  made  to  the  head  of  that  Department,  but  the  Comptroller 
of  the  Currency,  as  seen  above,  reports  direct  to  Congress,  and  not  through  the 
President  or  the  Secretary  of  the  Treasury. 


CHAPTER   II. 
ORGANIZATION    AND    POWERS    OF    NATIONAL   BANKS. 


12.  Formation  of  National  Banking  Associations. 
Section  5133. — Associations  for  carrying  on  the  business 
of  banking  under  this  Title  may  be  formed  by  any  number  of 
natural  persons,  not  less  in  any  case  than  five.  They  shall 
enter  into  articles  of  association,  which  shall  specify  in  general 
terms  the  object  for  which  the  association  is  formed,  and  may 
contain  any  other  provisions,  not  inconsistent  with  law,  which 
the  association  may  see  fit  to  adopt  for  the  regulation  of  its 
business  and  the  conduct  of  its  affairs.  These  articles  shall  be 
signed  by  the  persons  uniting  to  form  the  association,  and  a 
copy  of  them  shall  be  forwarded  to  the  Comptroller  of  the  Cur- 
rency, to  be  filed  and  preserved  in  his  office. 

The  natural  persons  meant  are  persons  other  than  artificial  persons,  such  as  cor- 
porations, &c,  who,  from  being  of  legal  age  and  not  otherwise  disqualified,  can  give 
validity  to  papers  by  their  signatures. 

Articles  of  association  are  simply  a  preliminary  agreement  or  contract  among  the 
signing  parties,  by  which  they  associate  themselves  for  the  purpose  of  organizing  a 
bank  under  the  National  banking  laws.  By  entering  into  such  articles  each  person 
becomes  legally  responsible  to  his  or  her  associates.  He  cannot  withdraw  and  refuse 
to  organize  a  bank  without  their  consent,  unanimously  expressed ;  although  all  but 
one  associate  desired  to  withdraw  after  signing,  the  remaining  associate  could 
legally  compel  the  others  to  go  on  with  the  organization.     The  Comptroller  requires 


these  articles  to  be  signed  in  duplicate,  so  that  instead  of  a  copy  an  original  can  be 
sent  to  his  office  to  be  filed. 

They  may  contain  any  provisions  which  the  associates  may  choose  to  insert 
relative  to  the  kind  of  banking  they  may  wish  to  undertake,  but  they  must  not 
contain  anything  inconsistent  with  the  provisions  of  the  National  banking  law. 
Thus  in  their  articles  the  associates  might  prescribe  that  the  bank  which  they 
proposed  to  organize  should  issue  no  currency,  which  the  National  law  permits, 
but  they  could  not  prescribe  that  the  bank  could  loan  money  directly  on  real 
estate,  which  the  National  law  forbids.  In  other  words,  the  articles  of  association 
may  limit  the  business  of  the  proposed  bank,  but  they  cannot  extend  it  beyond 
what  the  law  allows.  The  insertion  of  illegal  provisions  in  the  articles  does  not 
vitiate  them.  The  legal  provisions  stand ;  the  illegal  ones  are  simply  null  and 
void.  Section  5142  provides  that  the  maximum  limit  of  increase  of  capital  stock 
niay  be  provided  for  in  the  articles  of  association,  but  such  maximum  of  increase  is 
to  be  determined  by  the  Comptroller  of  the  Currency.  Once  so  fixed,  it  has  been 
held  by  the  United  States  Attorney  General  that  such  maximum  of  increase  cannot 
be  changed  by  the  bank,  except  through  the  instrumentality  of  Congress. 

It  is  customary  to  insert  in  articles  of  association  a  provision  for  their  amend- 
ment. This  provision  has  force  only  as  to  those  parts  of  the  articles  of  associ- 
ation which  the  associates  legally  retain  control  over.  Thus  the  name  of  the  bank 
and  the  location  can  only  be  changed  by  Act  of  Congress,  and  if  these  are  inserted 
in  the  articles  they  cannot  be  changed  by  a  mere  amendment  by  vote  of  associates, 
nor  can  the  minimum  limit  of  increase  of  stock  be  thus  changed. 

13.  Organization  Certificate. 

Section  5134. — The  persons  uniting  to  form  such  an  asso- 
ciation shall,  under  their  hands,  make  an  organization  certifi- 
cate, which  shall  specifically  state: 

First.  The  name  assumed  by  such  association;  which  name 
shall  be  subject  to  the  approval  of  the  Comptroller  of  the  Cur- 
rency. 

Second.  The  place  where  its  operations  of  discount  and  de- 
posit are  to  be  carried  on,  designating  the  State,  Territory,  or 
district,  and  the  particular  county  and  city,  town,  or  village. 

Third.  The  amount  of  capital  stock  and  the  number  of 
shares  into  which  the  same  is  to  be  divided. 

Fourth.  The  names  and  places  of  residence  of  the  share- 
holders and  the  number  of  shares  held  by  each  of  them. 

Fifth.  The  fact  that  the  certificate  is  made  to  enable  such 
persons  to  avail  themselves  of  the  advantages  of  this  Title. 

The  articles  of  association  having  been  duly  entered  into,  the  next  step  is  the 
execution  of  the  organization  certificate.  In  the  articles  the  associates  simply 
agree  to  form  a  bank ;  in  the  certificate  they  form  it. 

The  name  taken  is  subject  to  the  approval  of  the  Comptroller.  This  name,  once 
taken,  cannot  under  present  law  be  changed  by  the  direct  action  of  the  bank,  but 


can  only  be  altered  by  an  Act  of  Congress.  A  bill  is  now  pending  in  Congress 
■which,  if  it  becomes  a  law,  will  enable  any  National  bank  to  change  its  name  with 
the  approval  of  the  Comptroller.  | 

The  location  is  subject  to  the  same  restriction.  The  bill  mentioned  will,  if  it 
becomes  a  law.  enable  National  banks  to  change  their  location  under  certain  restric- 
tions. 

The  Comptroller's  office  has  in  some  cases  permitted  banks  to  open  offices  for 
the  reception  of  deposits  at  places  other  than  the  location  named  in  the  organiza- 
tion certificate  ;  but  these  offices  cannot  pay  checks  or  make  loans.  Whether  this 
is  correct  or  not  has  never  been  conclusively  tested  in  the  courts. 

The  amount  of  stock  and  number  of  shares  into  which  it  is  to  be  divided.  This 
is  subject  to  the  restrictions  of  Section  5138,  hereafter,  (which  see.) 

14.  Acknowledgment  of  Organization  Certificate. 
Section  5135. — The  organization  certificate  shall  be  ac- 
knowledged before  a  judge  of  some  court  of  record,  or  notary- 
public,  and  shall  be,  together  with  the  acknowledgment  there- 
of, authenticated  by  the  seal  of  such  court,  or  notary,  trans- 
mitted to  the  Comptroller  of  the  Currency,  who  shall  record 
and  carefully  preserve  the  same  in  his  office. 

The  organization  certificate  is  made  in  duplicate-  by  ruling  of  the  Comptroller's 
office,  and  thus,  while  one  original  can,  as  required,  be  sent  to  the  Comptroller's 
office,  the  other  original  can  be  retained  by  the  bank.  The  existence  of  the  associa- 
tion may  be  legally  proved  by  the  production  of  the  original  organization  certificate, 
and  also  by  a  copy  of  such  original  duly  certified  by  the  Comptroller  and  authenti- 
cated by  his  seal  of  office.  (See  Thompson's  National  Bank  Cases,  pp.  145.  612,  622, 
724.) 

15.  Corporate  Powers  of  Associations. 

Section  5136. — Upon  duly  making  and  filing  articles  of 
association  and  an  organization  certificate,  the  association  shall 
become,  as  from  the  date  of  the  execution  of  its  organization 
certificate,  a  body  corporate,*  and  as  such,  and  in  the  name 
designated  in  the  organization  certificate,  it  shall  have  power — 

First.   To  adopt  and  use  a  corporate  seal. 

Second.  To  have  succession  for  the  period  of  twenty  years  f 
from  its  organization,  unless  it  is  sooner  dissolved  according 
to  the  provisions  of  its  articles  of  association,  or  by  the  act  of 
its  shareholders  owning  two-thirds  of  its  stock,  or  unless  its 
franchise  becomes  forfeited  by  some  violation  of  law. 

Third.   To  make  contracts. 


*2  Abb.,  U.  S.,  416. 

fSee  Act  July  12th,  1882,  page  107. 

JSee  Act  May  1,  1886,  page  115  B. 


8 

Fourth.  To  sue  and  be  sued,  complain  and  defend,  in  any 
court  of  law  and  [or]  equity,  as  fully  as  natural  persons. 

Fifth.  To  elect  or  appoint  directors,  and  by  its  board  of 
directors  to  appoint  a  president,  vice-president,  cashier,  and 
other  officers,  define  their  duties,  require  bonds  of  them  and  fix 
the  penalty  thereof,  dismiss  such  officers,  or  any  of  them,  at 
pleasure,  and  appoint  others  to  fill  their  places. 

Sixth.  To  prescribe,  by  its  board  of  directors,  by-laws  not 
inconsistent  with  law,  regulating  the  manner  in  which  its  stock 
shall  be  transferred,  its  directors  elected  or  appointed,  its  offi- 
cers appointed,  its  property  transferred,  its  general  business 
conducted,  and  the  privileges  granted  to  it  by  law  exercised 
and  enjoyed. 

Seventh.  To  exercise  by  its  board  of  directors,  or  duly  au- 
thorized officers  or  agents,  subject  to  law,  all  such  incidental 
powers  as  shall  be  necessary  to  carry  on  the  business  of  bank- 
ing, by  discounting  and  negotiating  promissory  notes,  drafts, 
bills  of  exchange,  and  other  evidences  of  debt;  by  receiving 
deposits;  by  buying  and  selling  exchange,  coin,  and  bullion; 
by  loaning  money  on  personal  security,  and  by  obtaining,  issu- 
ing, and  circulating  notes  according  to  the  provisions  of  this 
Title. 

But  no  association  shall  transact  any  business  except  such 
as  is  incidental  and  necessarily  preliminary  to  its  organization 
until  it  has  been  authorized  by  the  Comptroller  of  the  Cur- 
rency to  commence  the  business  of  banking. 

This  section  should  be  most  carefully  perused  and  considered.  The  articles  of  as- 
sociation may  be  entered  into,  the  organization  certificate  executed,  but  until  such 
articles  and  certificate  are  properly  filed  with  the  Comptroller,  the  bank  is  not 
formed ;  but  when  these  papers  have  been  filed,  then,  from  the  date  of  the  execu- 
tion of  the  organization  certificate,  the  association  becomes  a  body  corporate,  and 
as  such,  and  in  the  name,  &c,  it  has  powers,  &c.  It  may  be  conceived  that  per- 
sons might  associate,  and  for  a  long  period  defer  the  execution  of  an  organization 
certificate.  Some  of  the  associates  might  not  wish  to  carry  out  their  agreement, 
and  the  matter  might  be  brought  to  the  courts  for  decision.  Even  after  both  papers 
are  duly  executed,  there  may  be  delay  in  filing,  and  after  filing  these  papers,  al- 
though the  association  thus  becomes  a  body  corporate,  and  can  sue  and  be  sued, 
&c,  the  same  as  a  natural  person,  yet  it  can  transact  no  business  except  such  as 
is  incidental  and  necessarily  preliminary  to  its  organization  until  it  is  authorized  by 
the  Comptroller  to  commence  the  business  of  banking.  A  bank  may,  therefore,  be 
fully  organized  as  far  as  subscriptions  to  its  stock,  election  of  directors,  appoint- 
ment of  officers,  preparation  and  adoption  of  by-laws  are  concerned  ;   but,  as  will  be 


seen  from  the  requirements  of  succeeding  sections,  if  its  capital  stock  be  not  paid 
in  or  United  States  bonds  deposited,  it  cannot  receive  deposits,  or  make  loans,  or  in 
any  way  deal  with  the  public.  A  bank  may  remain  in  this  inchoate  condition  for 
mouths,  or  possibly  years.  When  it  does  further  comply  with  the  law,  so  as  to  se- 
cure the  Comptroller's  authority,  its  period  of  succession  is  shortened  by  just  so 
much,  since  such  period  dates  from  the  execution  of  its  organization  certificate. 
The  period  of  succession  cannot  be  for  a  period  longer  than  twenty  years,  hut  as 
sociates  may  limit  it  to  a  shorter  period,  if  they  so  prefer,  by  so  stating  in  their  ar- 
ticles of  association.  The  first  clause  of  enumerated  powers  gives  the  privilege  of 
adopting  and  using  a  corporate  seal.  The  Comptroller  has  required  that  this  power 
be  exercised,  in  order  that  important  papers  sent  to  his  office  may  be  authenticated 
by  such  seal. 

The  second  clause  relates  to  the  period  of  succession,  and  has  already  been  com- 
mented on. 

Third.  To  make  contracts.  This  has  been  held  to  mean  not  all  contracts,  but 
such  contracts  only  as  are  natural  and  germane  to  the  exercise  of  the  other  powers 
granted  in  the  section.  Thus,  a  bank  could  not  legally  contract  to  build  a  railroad, 
but  it  might  contract  to  make  a  loan  at  a  future  date. 

Fourth  clause.     The  jurisdiction  of  the  courts — Federal,  State,  and  Municipal — 
over  suits  brought  by  and  against  National  banks,  is  regulated  by  Sections  5G3,  029, 
711,  5198,  5242,  151,  152,  and  the  proviso  to  Section  4  of  the  Act  of  July  12th,  1882. 
'  (which  see.) 

Fifth  clause.  Directors  may  be  elected  or  appointed.  They  must  first  be  elected, 
and  this  in  accordance  with  the  requirements  of  Section  5145,  (which  see.)  The 
appointment  refers  to  the  filling  of  vacancies,  (see  Section  5148.)  The  officers 
proper  are  appointed  by  the  directors,  who  also  define  their  duties,  &c. 

Sixth  clause  gives  power  to  the  board  of  directors  to  make  provision  for  the  gov- 
ernment of  the  internal  affairs  of  the  bank  within  the  general  provisions  of  the  law. 
They  may,  for  instance,  provide  in  a  by-law  that  in  case  of  a  vacancy  in  the  board 
of  directors  the  president  should  exercise  the  power  of  appointment  in  behalf  of  the 
board  ;  but  they  could  not  by  a  by  law  require  a  delay  of  six  months  before  vacan- 
cies were  filled,  inasmuch  as  Section  5148  requires  the  immediate  filling  of  such 
vacancies.  They  might  determine  that  the  vice-president  and  cashier  should  sign 
the  notes  of  the  bank,  and  not  the  president  and  cashier;  but  they  could  not  devolve 
both  offices  of  vice-president  and  cashier  on  same  person,  inasmuch  as  the  law 
requires  each  note  to  be  signed  by  two  different  persons. 

Seventh  clause.  There  are  two  constructions  of  this  section — one  that  the  words 
"  all  such  incidental  powers  as  may  be  necessary  to  carry  on  the  business  of  bank- 
ing "  are  to  be  taken  by  themselves,  and  that  they  grant  the  exercise  of  any  power 
whatever  which,  by  any  ingenuity,  could  be  made  to  appear  consistent  with  a  banking 
business.  The  other  construction,  and  the  one  which  is  sustained  by  the  greatest 
weight  of  authority,  is  that  the  words  quoted  are  limited  by  what  follows ;  in  other 
words,  the  banking,  in  which  National  banks  are  authorized  to  exercise  incidental 
powers,  is  defined  as  discounting  and  negotiating  promissory  notes,  drafts.  &c. :  re- 
ceiving deposits  ;  buying  and  selling  exchange,  coin,  and  bullion;  loaning  money 
on  personal  security,  and  issuing  notes;  and  nothing  else  It  has  been  held  that  tin- 
legal  maxim  " expressio  unius  est  exclusio  alterius"  holds;  that  what  is  not  expressly 
granted  is  withheld.     Thus  there  has  been  grave  doubt  as  to  whether  it  was  legal 


IO 

for  a  bank  to  purchase  a  note,  or  rather  whether  the  negotiation  of  a  note  includes 
the  purchase.  It  is  doubtful  -whether  National  banks  have  a  right  to  deal  in  stocks 
and  bonds,  or  to  act  as  an  agent  for  the  negotiation  of  stocks  and  bonds.  It  is  prob- 
able that  the  courts  in  deciding  any  point  as  to  the  powers  of  National  banks,  where 
the  exercise  of  a  power  is  not  clearly  forbidden  by  the  Banking  laws,  would,  in  case 
the  exercise  of  such  power  was  not  clearly  granted,  be  guided  very  much  by  the 
custom  of  banks.  Every  oue  is  aware  that  business  methods  change  from  time  to 
time,  and  that  new  methods  for  accomplishing  similar  ends  are  constantly  being 
devised.  Banks  are  intended  to  meet  the  wants  of  the  business  communities,  aud  to 
do  so  must  be  swayed  by  business  customs.  The  courts  in  banking  matters  have 
made  custom  a  very  important  element  in  reaching  their  decisions,  and  they  will 
doubtless  continue  to  do  so. 

The  committal  of  an  act  ultra  vires  by  a  National  bank  does  not  necessarily  vitiate 
that  act.  The  U.  S.  Supreme  Court  has  held  that  acts  ultra  vires  can  only  be  taken 
cognizance  of  by  the  Government,  whose  creature  the  bank  is.  Thus,  while  it  is 
undeniably  ultra  vires  for  a  National  bank  to  loan  money  direct  on  real  estate,  yet 
the  money  can  be  collected  of  the  borrower,  a  mortgage  taken  can  be  foreclosed,  &c. 
The  Government  can,  however,  if  it  deems  best,  bring  suit  as  prescribed  by  law  to 
forfeit  the  franchises  of  banks  so  offending.  The  most  important  cases  bearing  on 
these  points  may  be  found  in  Thompson's  National  Bank  Cases,  124,  128,  169,  2G4, 
314,  317,  333,  379,  466,  486,  533,  724,  854,  637,  590,  715,  728,  794,  824,  836,  864, 
875,  882,  905  ;  Brown's  National  Bank  Cases,  (a  continuation  of  Thompson,)  pages  13, 
99,  238,  264,  296,  319,  337,  373,  375,  462. 

16.    Limitation  as  to  Real  Estate  and  Mortgages. 

Section  5137. — A  National  banking  association  may  pur- 
chase, hold,  and  convey  real  estate  for  the  following  purposes, 
and  for  no  others : 

First.  Such  as  shall  be  necessary  for  its  immediate  accom- 
modation in  the  transaction  of  its  business. 

Second.  Such  as  shall  be  mortgaged  to  it  in  good  faith  by 
way  of  security  for  debts  previously  contracted. 

Third.  Such  as  shall  be  conveyed  to  it  in  satisfaction  of 
debts  previously  contracted  in  the  course  of  its  dealings. 

Fourth.  Such  as  it  shall  purchase  at  sales  under  judgments, 
decrees,  or  mortgages  held  by  the  association,  or  shall  pur- 
chase to  secure  debts  due  to  it. 

But  no  such  association  shall  hold  the  possession  of  any  real 
estate  under  mortgage,  or  the  title  and  possession  of  any  real 
estate  purchased  to  secure  any  debts  due  to  it,  for  a  longer 
period  than  five  years. 

In  purchasing  or  conveying  real  estate,  a  National  bank  will,  of  course,  act 
through  its  president  or  cashier,  duly  authorized  by  regular  action  of  its  board  of 
directors. 


II 

Banking  house  may.  perhaps,  include  portions  of  building  built  chiefly  for  its 
own  use,  which  the  bank  rents  to  others;  but  it  is  a  question  how  far  a  National 
bank  can  purchase  or  improve  real  estate  under  color  of  erecting  a  banking  house. 
The  additions  to  a  building  must  in  some  way  be  necessary  to  its  appearance,  safety, 
or  compatibility  with  its  surroundings. 

The  second,  third,  and  fourth  clauses  make  it  plain  that  real  estate  other  than 
banking  house  is  to  be  taken,  held,  &c,  only  when  the  personal  security  which  the 
bank  originally  held  has  in  some  way  become  inadequate,  either  before  or  after  the 
maturity  of  the  debt. 

The  United  States  Supreme  Court  has,  however,  held  that  real  estate  security  di- 
rectly taken  as  the  primitive  security  for  a  loan  can  be  disposed  of  or  transferred 
by  a  National  bank,  the  fact  of  taking  such  security  being  ultra  vires  not  vitiating 
the  transaction  in  any  way,  or  giving  any  defense  to  the  borrower,  seller,  or  mort- 
gagor. The  act  on  the  part  of  the  bank  may  be  in  violation  of  its  corporate  rights, 
but  this  violation  of  law  can  only  be  punished  by  suit  for  forfeiture  of  charter, 
brought  in  accordance  with  law  by  the  Comptroller  of  the  Currency.  (See  Section 
5239,  par.  118.) 

It  has  been  a  criticism  upon  the  National  system  that  the  banks  could  not  loan  on 
real  estate  security.  When  it  is  remembered  that  loans  on  good  real  estate  security 
can  be  readily  obtained  for  longer  time  and  at  less  rates  of  interest  than  is  the  case 
in  regard  to  loans  on  personal  security,  the  hollowness  of  this  criticism  at  once  ap- 
pears. Any  one  can  obtain  a  loan  of  a  National  bank  under  ordinary  circumstances 
by  presenting  a  good  endorsement,  and  a  good  endorser  is  readily  obtained  by  giving 
such  endorser  the  real  estate  security.  The  bank,  in  accordance  with  law,  looks  to- 
the  maker  and  endorser. 

The  limitation  as  to  length  of  time  during  which  mortgages  and  real  estate  can 
be  held  is  a  wise  one,  as  it  prevents  too  great  a  locking-up  of  the  bauk's  resources. 
Five  years  is  generally  a  long  enough  period  during  which  to  dispose  of  real  estate 
of  any  description  to  the  best  advantage.  In  case,  however,  a  bank  may  find  it 
difficult  to  do  so,  the  Comptroller's  office  has  permitted  the  placing  of  property  in 
the  hands  of  trustees  for  the  benefit  of  the  bank,  thus  removing  the  items  from  the 
balance-sheet,  and  leaving  them  in  the  same  condition  as  bad  debts  charged  off". 
Real  estate  is  the  ultimate  security  in  the  case  of  most  loans,  but  good  bankers 
find  no  difficulty  in  complying  with  the  law,  by  treating  it  as  such;only  to  be  taken 
when  all  other  means  of  securing  a  debt  fail.  (See  Thompson's  National  Bank 
Cases,  pages  2G4,  353,  480,  486,  488,  490,  516,  647,  854,  888,  618,  652,  745,  828, 
888;  Brown's  Cases,  pages  13,  222.  224,  227,  228,  237,  278,  280,  293,  300,  311,  424, 
426.) 

17.  Minimum  Capital  Required. 
Section  5138. — No  association  shall  be  organized  under  this 
Title  with  a  less  capital  than  one  hundred  thousand  dollars  ; 
except  that  banks  with  a  capital  of  not  less  than  fifty  thousand 
dollars  may,  with  the  approval  of  the  Secretary  of  the  Treasury, 
be  organized  in  any  place  the  population  of  which  does  not 
exceed  six  thousand  inhabitants.  Xo  association  shall  be 
organized  in  a  city  the  population  of  which  exceeds  fifty  thou- 


12 

sand  persons  with  a  less  capital  than  two  hundred  thousand 
dollars. 

The  population  of  a  place  in  the  United  States  is  legally  determined  by  the  last 
previous  census.  Thus  a  bank  organized  at  any  time  between  1880  and  1890  would 
generally  be  bound  by  the  census  of  1880.  Exceptions  might  of  course  arise,  as,  for 
instance,  where  new  towns  are  started  in  the  interval,  and  other  proof  of  population 
might  then  be  accepted  by  the  Comptroller.  Small  variations  in  population  be- 
tween censuses,  the  only  proof  of  which  is  found  to  consist  of  estimates  or  partial 
counts,  would  not  be  regarded.  A  bank  organized  with  $50,000  capital  in  a  small 
place  might  continue  with  that  capital  if  the  population  should  increase  to  any 
number.  It  thus  sometimes  happens  that  we  find  banks  in  some  towns  and  cities 
that  appear  to  have  less  than  the  minimum  capital  required  by  law.  They  were 
either  organized  when  the  places  were  smaller,  or  were  organized  in  villages  after- 
wards absorbed  by  cities  lying  near. 

When  application  is  made  to  the  Comptroller  for  a  bank  with  $50,000  capital,  he 
certifies  the  application,  with  statement  as  to  population,  &c,  to  the  Secretary  of  the 
Treasury,  who  thereupon  takes  action  and  approves  or  not  as  he  deems  best.  Gen- 
erally there  is  no  objection,  but  the  Secretary  might  not  give  his  approval  if  he 
thought  a  bank  unnecessary,  or  if  there  was  a  bank  already  in  the  place  giviug 
sufficient  banking  facilities. 

18.    Stockholders'  Rights  and  Liabilities. 

Section  5139. — The  capital  stock  of  each  association  shall 
he  divided  into  shares  of  one  hundred  dollars  each,  and  be 
deemed  personal  property,  and  transferable  on  the  books  of 
the  association  in  such  manner  as  may  be  prescribed  in  the 
by-laws  or  articles  of  association.  Every  person  becoming  a 
shareholder  *  by  such  transfer  shall,  in  proportion  to  his  shares, 
succeed  to  all  the  rights  and  liabilities  of  the  prior  holder  of 
such  shares ;  and  no  change  shall  be  made  in  the  articles  of 
association  by  which  the  rights,  remedies,  or  security  of  the 
existing  creditors  of  the  association  shall  be  impaired. 

The  exception  to  division  into  shares  of  $100  each  is  in  case  of  State  banks  con- 
verted. (See  Section  5154.  par.  36.)  If  a  converted  bank  desires  to  change  the  de- 
nomination of  its  shares,  the  new  denomination  must  be  $100.  The  shares  are 
personal  property,  transferable  on  the  books  of  the  association  in  such  manner  as 
may  be  prescribed  in  the  by-laws  or  articles  of  association.  A  bank  cannot,  how- 
ever, by  a  provision  in  its  by-laws  prevent  the  transfer  of  shares  of  a  stockholder 
who  may  be  indebted  to  it.  It  has  no  prior  lien  on  the  shares  of  any  stockholder, 
but  must  proceed  by  such  judgment  and  execution  the  same  as  any  other  creditor. 
Shares  are  property  entirely  distinct  from  the  capital  stock.  (See  remarks  under 
Section  5219,  par.  95.)  Shares  of  National  bank  stock,  it  must  be  remembered,  not 
only  initiate  a  right  to  a  certain  proportion  of  the  net  property  and  profits  of  the 

*Van  Allen  v.  The  Assessors,  3  Wall.,  573. 


i3 

bank,  and  certain  rights  in  controlling  its  management,  but  they  also  imply  liabil- 
ities. A  transferrer  of  shares  must  see  that  he  transfers  not  only  his  rights  and 
privileges,  but  his  liabilities.  (See  remarks  under  Section  5151,  par.  33.)  "What 
changes  may  or  may  not  be  made  in  the  articles  of  association  of  a  National  bank 
depends.  1st.  as  has  already  been  seen,  (Section  5133,  par.  12,)  upon  their  being  in 
accordance  with  law  ;  and,  2d,  they  must  not  interfere  with  the  rights  of  existing 
creditors — that  is,  those  other  than  stockholders  to  whom  the  bank  is  indebted. 

19.    "When  Capital  Stock  must  be  Paid  in. 

Section  5140. — At  least  fifty  per  centum  of  the  capital  stock 
of  every  association  shall  be  paid  in  before  it  shall  be  author- 
ized to  commence  business ;  and  the  remainder  of  the  capital 
stock  of  such  association  shall  be  paid  in  installments  of  at 
least  ten  per  centum  each,  on  the  whole  amount  of  the  capital, 
as  frequently  as  one  installment  at  the  end  of  each  succeeding 
month  from  the  time  it  shall  be  authorized  by  the  Comptroller 
of  the  Currency  to  commence  business  ;  and  the  payment  of 
each  installment  shall  be  certified  to  the  Comptroller,  under 
oath,  by  the  president  or  cashier  of  the  association. 

The  Comptroller's  office  furnishes  blanks  upon  which  to  certify  payment  of  capital. 
Probably  the  theory  of  the  law  is,  that  each  subscriber  shall  pay  half  of  his  sub- 
scription down,  and  the  remainder  in  five  equal  monthly  installments.  This  is- 
really  what  a  subscriber  to  National  bank  stock,  who  is  expected  to  know  the  law, 
agrees  to  do.  and  it  is  only  by  following  this  course  that  the  organizers  of  a  National 
bank  can  securely  hold  each  subscriber,  as  will  be  seen  from  remarks  on  next  sec- 
tion. But  the  Comptroller  does  not  usually  require  a  certificate  in  detail,  but  only 
that  capital  amounting  to  fifty  per  cent.,  or  ten  per  cent.,  as  the  case  may  be,  has  in 
the  aggregate  been  paid  in.  It  is  sometimes  convenient  for  some  subscribers  to  pay 
more  at  once,  and  this  enables  the  officers  to  certify  the  payments  necessary  to  com- 
ply with  the  letter  of  the  law.  without  waiting  for  the  slower  subscribers.  The  offi- 
cers certify  fifty  per  cent.  paid.  This  is  the  certificate  of  officers  required  by  Section 
5168,  paragraph  21,  post,  and  is  called  the  first  installment.  Upon  the  receipt  of 
this  the  Comptroller  may,  if  bonds  have  been  deposited,  authorize  the  bank  to  com- 
mence business.  The  date  of  the  Comptroller's  certificate  of  authority  to  commence 
business  fixes  the  date  of  the  payment  of  the  succeeding  installments.  Thus,  if  in 
any  case  this  certificate  be  dated  January  1st,  the  second,  third,  fourth,  fifth,  and 
sixth  installments  should  be  paid  by  the  subscribers  on  or  before  the  first  days  of 
February,  March,  April.  May,  and  June,  respectively.  The  certificate  to  the  Comp- 
troller of  such  succeeding  payments  should  be  made  as  soon  as  practicable  in  each 
case;  but  in  this  connection  bank  officers  should  study  Section  5141,  paragraph  20, 
post,  and  remarks  thereon.  v 

20.   Failure  to  Pay  Installments  on  Stock,  &c. 

Section  5141. — Whenever  any  shareholder,  or  his  assignee, 
fails  to  pay  any  installment  on  the  stock  when  the  same  is  re- 


14 

quired  by  the  preceding  section  to  be  paid,  the  directors  of  such 
association  may  sell  the  stock  of  such  delinquent  shareholder  at 
public  auction,  having  given  three  weeks'  previous  notice 
thereof  in  a  newspaper  published  and  of  general  circulation  in 
the  city  or  county  where  the  association  is  located,  or  if  no 
newspaper  is  published  in  said  city  or  county,  then  in  a  news- 
paper published  nearest  thereto,  to  any  person  who  will  pay 
the  highest  price  therefor,  to  be  not  less  than  the  amount  then 
due  thereon,  with  the  expenses  of  advertisement  and  sale  ;  and 
the  excess,  if  any,  shall  be  paid  to  the  delinquent  shareholder. 
If  no  bidder  can  be  found  who  will  pay  for  such  stock  the 
amount  due  thereon  to  the  association,  and  the  cost  of  adver- 
tisement and  sale,  the  amount  previously  paid  shall  be  for- 
feited to  the  association,  and  such  stock  shall  be  sold  as  the 
directors  may  order,  within  six  months  from  the  time  of  such 
forfeiture,  and  if  not  sold  it  shall  be  canceled  and  deducted 
from  the  capital  stock  of  the  association.  If  any  such  can- 
cellation and  reduction  shall  reduce  the  capital  of  the  associ- 
ation below  the  minimum  of  capital  required  by  law,  the  cap- 
ital stock  shall,  within  thirty  days  from  the  date  of  such  can- 
cellation, be  increased  to  the  required  amount;  in  default  of 
which  a  receiver  may  be  appointed,  according  to  the  provis- 
ions of  section  fifty-two  hundred  and  thirty-four,  to  close  up 
the  business  of  the  association.  * 

This  section  is  entirely  for  the  direction  of  bank  managers,  and  points  out  the 
proper  course  to  be  taken  in  bringing  in  the  capital  of  the  bank.  It  must  be  re- 
membered that  from  the  time  of  his  subscription  a  person  becomes  a  shareholder, 
and  that  all  the  shareholders  have  entered  into  a  contract  among  themselves,  and 
are  mutually  responsible  to  each  other.  If  only  five  persons  start  the  bank,  and 
subscribe  for  all  the  stock,  with  the  purpose  of  afterwards  distributing  the  same 
among  a  number  of  parties,  it  is  well  for  each  of  the  five  associates  to  have  his  dis- 
tributees selected  and  to  bind  them  by  a  form  contract  with  himself  to  each  take 
the  stock  he  destines  for  them.  The  stock  doubtless  has  a  legal  standing  before  a 
single  payment  is  made,  and  the  association  may  be  legally  organized  and  become 
a  body  corporate  before  a  single  dollar  of  the  capital  is  paid  hi  by  any  one.  Thus 
sales  or  transfers  of  stock  may  take  place  before  any  capital  is  paid  in.  This  is  in 
line  with  the  decision  of  the  United  Mates  Supreme  Court  in  Van  Allen  v.  Assessors, 
3  Wall.,  573,  which  holds  a  share  of  stock  to  be  an  entity  distinct  from  capital. 
The  actual  holder  or  subscriber,  in  whose  name  the  stock  stands  on  the  books  of  the 
bank  at  the  time  the  directors  call  for  the  payment  of  the  first  installment  of  fifty 

*Section  5142,  pagel6. 


15 

per  cent.,  must  pay  it,  and  payment  can  doubtless  be  compelled  by  legal  proceedings. 
The  section  under  consideration  does  not  refer  to  this  first  installment,  but  to  the 
subsequent  installments,  the  dates  of  payment  of  which  were  fixed  by  the  preceding 
section.  The  whole  tenor  of  Section  5141  implies  a  previous  payment  of  fifty  per 
cent.,  which  is  in  the  nature  of  a  forfeit,  if  the  stock  has  to  be  sold  on  account  of 
failure  to  meet  the  subsequent  installments.  A  new  association  would,  strictly, 
under  this  section  have  the  following  time  to  make  good  its  capital  before  a  receiver 
could  be  appointed :  First,  the  time  until  the  installment  became  due ;  then  three 
weeks  for  notice  by  publication ;  then  six  months  from  forfeiture  to  cancellation  ; 
and,  finally,  thirty  days  longer  in  which  to  bring  up  capital  to  required  amount. 
How  capital  is  to  be  made  good  in  such  case  is  not  distinctly  stated,  but  probably 
by  assessment  on  remaining  stockholders.     (See  Section  5205,  par.  83,  post.) 

21.  Comptroller  to  Determine  if  Association  is  entitled  to 
Commence  Business. 

Section  5168. — Whenever  a  certificate  is  transmitted  to  the 
Comptroller  of  the  Currency,  as  provided  in  this  Title,  and  the 
association  transmitting  the  same  notifies  the  Comptroller  that 
at  least  fifty  per  centum  of  its  capital  stock  has  been  duly  paid 
in,  and  that  such  association  has  complied  with  all  the  provis- 
ions of  this  Title  required  to  be  complied  with  before  an  asso- 
ciation shall  be  authorized  to  commence  the  business  of  bank- 
ing, the  Comptroller  shall  examine  into  the  condition  of  such 
association,  ascertain  especially  the  amount  of  money  paid  in 
on  account  of  its  capital,  the  name  and  place  of  residence  of 
each  of  its  directors,  and  the  amount  of  the  capital  stock  of 
which  each  is  the  owner  in  good  faith,  and  generally  whether 
such  association  has  complied  with  all  the  provisions  of  this 
Title  required  to  entitle  it  to  engage  in  the  business  of  bank- 
ing; and  shall  cause  to  be  made  and  attested  by  the  oaths  of  a 
majority  of  the  directors,  and  by  the  president  or  cashier  of  the 
association,  a  statement  of  all  the  facts  necessary  to  enable  the 
Comptroller  to  determine  whether  the  association  is  lawfully 
entitled  to  commence  the  business  of  banking. 

The  certificate  described  in  this  section  is  that  known  in  the  Comptroller's  office 
as  "Certificate  of  Officers  and  Directors."  The  certificate  contains  the  notification 
and  statements  mentioned  in  the  section.  The  Comptroller  has  under  this  and 
the  subsequent  section  the  right  to  send  an  examiner  before  granting  certificate 
of  authority  to  commence  business,  but  usually  the  deposit  of  bonds  and  the  certifi- 
cate of  officers  and  directors,  in  proper  form,  are  deemed  sufficient  proof  by  him. 

22.   Certificates  of  Authority  to  Commence  Business. 
Section  5169. — If,  upon  a  careful  examination  of  the  facts 
so  reported,  and  of  any  other  facts  which  may  come   to  the 


i6 

knowledge  of  the  Comptroller,  whether  by  means  of  a  special 
commission  appointed  by  him  for  the  purpose  of  inquiring  into 
the  condition  of  such  association,  or  otherwise,  it  appears  that 
such  association  is  lawfully  entitled  to  commence  the  business 
of  banking,  the  Comptroller  shall  give  to  such  association  a 
certificate,  under  his  hand  and  official  seal,  that  such  associa- 
tion has  complied  with  all  the  provisions  required  to  be  com- 
plied with  before  commencing  the  business  of  banking,  and 
that  such  association  is  authorized  to  commence  such  business. 
But  the  Comptroller  may  withhold  from  an  association  his  cer- 
tificate authorizing  the  commencement  of  business,  whenever 
he  has  reason  to  suppose  that  the  shareholders  have  formed  the 
same  for  any  other  than  the  legitimate  objects  contemplated  by 
this  Title. 

See  remarks  on  preceding  section. 

23.  Publication  of  Certificate. 

Section  5170. — The  association  shall  cause  the  certificate 
issued  under  the  preceding  section  to  be  published  in  some 
newspaper  printed  in  the  city  or  county  where  the  association 
is  located,  for  at  least  sixty  days  next  after  the  issuing  thereof ;. 
or  if  no  newspaper  is  published  in  such  city  or  county,  then  in 
the  newspaper  published  nearest  thereto. 

This  refers  to  the  publication  of  the  Comptroller's  certificate  of  authority  to  com- 
mence business.  The  Comptroller's  office  requires  that  a  copy  of  the  paper  con- 
taining this  notice  be  sent  to  that  office  for  filling. 

24.  Increase  of  Capital  Stock.  * 

Section  5142. — Any  association  formed  under  this  Title 
may,  by  its  articles  of  association,  provide  for  an  increase  of 
its  capital  from  time  to  time,  as  may  be  deemed  expedient, 
subject  to  the  limitations  of  this  Title.  But  the  maximum  of 
such  increase  to  be  provided  in  the  articles  of  association  shall 
be  determined  by  the  Comptroller  of  the  Currency  ;  and  no  in- 
crease of  capital  shall  be  valid  until  the  whole  amount  of  such 
increase  is  paid  in,  and  notice  thereof  has  been  transmitted  to 
the  Comptroller  of  the  Currency,  and  his  certificate  obtained 
specifying  the  amount  of  such  increase  of  capital  stock,  with 
his  approval  thereof,  and  that  it  has  been  duly  paid  in  as  part 
of  the  capital  of  such  association. 

It  is  usual  for  the  associates  to  state  in  the  articles  of  association  that  the  paid- 
in  capital  shall  be  a  specified  sum,  with  the  power  of  increasing  to  a  specified  max- 

*See  Act  May  1.  1886,  page  115B. 


i7 

imum  sum.  This  maximum  is  agreed  to  and  determined  by  the  Comptroller  when  lie 
accepts  the  articles  as  sent  to  him.  This  maximum,  once  so  fixed,  cannot  afterwards 
be  changed,  as  has  been  decided  by  the  Attorney-General,  except  by  Act  of  Congress.* 
It  is  therefore  important  that  in  preparing  the  articles  of  association  the  maximum 
of  increase  should  be  fixed  at  a  sum  sufficiently  large  to  meet  the  future  needs  of  the 
business  of  the  bank.  In  the  articles  of  association  it  is  customary  to  grant  to  the 
directors  full  power  to  decide  when  an  increase  of  capital  is  to  be  made,  and  how  much 
it  shall  be;  but  they  must  offer  this  increased  stock  pro  rata  to  the  existing  stock- 
holders, and  not  until  it  has  been  declined  by  them  can  the  new  stock  be  offered  to 
outsiders.  The  proper  course  for  an  increase  of  stock  is  for  the  directors  to  pass  a 
resolution  at  a  regular  meeting,  and  then  notify  each  shareholder  that  he  has  the 
option  to  subscribe  for  a  certain  portion.  As  subscriptions  are  paid  they  are  placed 
to  the  credit  of  the  subscriber  on  account  of  new  stock.  When  a  sufficient  sum 
has  been  paid  in,  the  directors  should  cause  notice  of  such  payment  to  be  sent  to 
the  Comptroller,  who  will  then  issue  his  certificate  of  approval,  if  the  amount  is 
within  the  limit  prescribed  by  the  articles  of  association.  Some  have  attempted  to 
hold  that  the  directors  must  specify  the  amount  of  the  increase,  and  that  the  whole 
amount  so  specified  must  be  paid  in  before  the  Comptroller's  approval  can  be  given ; 
but  the  better  view  is,  and  it  has  been  sustained  in  the  courts,  that  although  the 
directors  may  specify  a  definite  sum,  yet  if,  for  any  reason,  they  may  fail  to  secure 
subscriptions  for  and  payment  of  the  whole,  they  may  certify  to  the  Comptroller 
such  portion  as  is  actually  paid,  and  the  Comptroller  may  legally  give  his  approval 
of  such  increase.  In  other  words,  the  law  simply  means  that  the  increase  notified 
to  the  Comptroller  must  have  been  paid  in.  This  view  of  the  case  enables  directors 
and  stockholders  of  National  banks  to  receive  subscriptions  from  time  to  time  on 
stock  in  small  amounts,  which  can  be  kept  in  a  new  stock  account  until  a  sufficient 
aggregate  has  accumulated,  when  the  whole  can  be  notified  to  the  Comptroller,  and 
on  his  approval  it  becomes  valid  stock.  Scrip  may  be  issued  to  such  subscribers, 
but  until  the  Comptroller's  certificate  of  approval  is  received  no  certificates  of  stock 
should  be  given  to  the  subscribers;  nor  should  it  be  carried  on  the  balance-sheet  of 
the  bank  as  capital  stock  paid  in,  but  simply  as  subscriptions  to  new  stock.  Until 
the  Comptroller's  approval  is  obtained  the  legal  status  of  such  a  subscriber  is  that 
of  a  depositor  for  a  special  purpose.  Proper  forms  of  blanks  for  notifying  the  Comp- 
troller can  be  obtained  at  his  office. 

Stockholders  need  not  delegate  the  power  of  increase  to  directors  in  their  articles 
of  association,  but  can  provide  therein  that  the  question  of  increase  be  referred  to 
the  stockholders. 

25.  Reduction  of  Capital  Stock. 
Section  5143. — Any  association  formed  under  this  Title 
may,  by  the  vote  of  shareholders  owning  two-thirds  of  its  capi- 
tal stock,  reduce  its  capital  to  any  sum  not  below  the  amount 
required  by  this  Title  to  authorize  the  formation  of  associa- 
tions ;  but  no  such  reduction  shall  be  allowable  which  will  re- 
duce the  capital  of  the  association  below  the  amount  required 
for  its  outstanding  circulation,  nor  shall  any  such  reduction 

♦See  Act  May  1,  188G,  page  115B. 


i8 

be  made  until  the  amount  of  the  proposed  reduction  has  been 
reported  to  the  Comptroller  of  the  Currency  and  his  approval 
thereof  obtained. 

A  reduction  of  stock  can  only  be  effected  bjr  the  consenting  vote  of  two-thirds  of 
such  stock.  A  bank  in  a  place  where  a  minimum  of  $50,000  capital  is  required 
cannot  reduce  below  that  sum.  Nor  could  a  bank  which  might  otherwise  legally 
reduce  to  $50,000,  reduce  to  that  sum  until  it  had  reduced  its  circulation  to  $45,000, 
or  90  per  cent,  of  the  proposed  reduction.  The  method  of  retiring  circulation  will 
be  found  elsewhere,  in  remarks  on  Section  5167,  par.  49;  Section  5184,  par.  63  ; 
Section  5222,  par.  101  ;  Section  5224,  par.  103;  Section  5232,  par.  Ill  ;  Sections  3 
and  4,  Act  of  June  20th,  1874,  under  which  this  subject  is  exhaustively  treated. 
The  proper  course,  after  a  reduction  has  been  determined  on  as  necessary  by  the 
managers  of  the  bank,  is  to  call  a  meeting  of  the  shareholders.  This  meeting  may  be 
called  by  publication,  or  by  due  notification  of  each  stockholder  by  mail ;  registered 
mail  is  perhaps  best.  If  by  publication,  the  publication  should  doubtless  be  for 
such  time  previous  to  the  date  of  the  meeting  as  constitutes  legal  notice  of  publi- 
cation by  the  laws  of  the  State  where  the  bank  is  located.  Legally,  a  stockholder 
who  has  been  duly  notified  of  a  meeting,  and  who  does  not  attend,  gives  his  assent 
by  implication  ;  but,  as  the  law  requires  a  vote,  the  reduction  should  be  agreed  to 
by  the  votes  cast,  either  by  proxy  or  in  person,  of  two-thirds  of  the  stock.  The 
Comptroller's  office  furnishes  the  proper  blanks  upon  which  to  certify  to  that  office 
the  result  of  such  vote.  When  the  Comptroller's  approval  is  obtained  the  reduc- 
tion can  be  completed  by  the  return  of  money  to  stockholders  and  calling-in  of  cer- 
tificates. Each  stockholder  has  a  legal  right  to  demand  the  payment  to  him  of  his 
pro  rata  share  of  such  reduction.  If,  however,  the  capital  of  the  bank  is  impaired, 
sufficient  of  the  reduction  must  be  applied  to  make  good  such  impairment  by  charg- 
ing to  it  the  bad  assets  which  have  caused  the  deficiency.  The  remainder  must  go 
pro  rata  to  stockholders.  Individual  stockholders  may  agree  to  permit  their  portion 
of  the  reduction  to  remain  in  the  bank  to  be  placed  to  surplus  or  undivided  profits, 
but  a  majority  of  stockholders  cannot  compel  a  minority  to  do  this.  In  making  a 
reduction  the  old  certificates  of  shares  should  be  called  in  and  new  ones  issued.  If 
the  capital  is  reduced  one-third,  or  any  other  proportion,  there  will  necessarily  be 
fractions  of  shares  in  some  of  the  new  certificates.  Fractions  of  shares  are  not  for- 
bidden by  law ;  they  can  be  voted  pro  tanto  the  same  as  whole  shares. 

26.  Rights  of  Shareholders  at  Elections. 
Sectiqn  5144. — In  all  elections  of  directors,  and  in  deciding 
all  questions  at  meetings  of  shareholders,  each  shareholder 
shall  be  entitled  to  one  vote  on  each  share  of  stock  held  by 
him.  Shareholders  may  vote  by  proxies  duly  authorized  in 
writing;  but  no  officer,  clerk,  teller,  or  book-keeper  of  such 
association  shall  act  as  proxy ;  and  no  shareholder  whose  lia- 
bility is  past  due  and  unpaid  shall  be  allowed  to  vote. 

A  form  of  proxy  will  be  found  on  page  122,  this  work.  A  director  is,  perhaps, 
not  an  officer  in  the  sense  mentioned  in  this  section,  but,  to  be  on  the  safe  side,  it 
will  be  better  to  select  as  proxies  parties  who  are  outside  of  the  management  of  the 


19 

bank,  either  as  directors,  officers,  &c.  The  provision  as  to  shareholders  whose  lia- 
bilities are  past  due  and  unpaid,  is  perhaps  too  laxly  observed  at  meetings  for  the 
election  of  directors.  Its  observance  should  be  insisted  upon,  not  only  as  to  voters 
but  as  to  candidates  for  the  director}-. 

27.  Election  of  Directors. 
Section  5145. — The  affairs  of  each  association  shall  be 
managed  by  not  less  than  five  directors,  who  shall  be  elected 
by  the  shareholders  at  a  meeting  to  be  held  at  any  time  before 
the  association  is  authorized  by  the  Comptroller  of  the  Cur- 
rency to  commence  the  business  of  banking ;  and  afterward 
at  meetings  to  be  held  on  such  day  in  January  of  each  year 
as  is  specified  therefor  in  the  articles  of  association.  The 
directors  shall  hold  office  for  one  year,  and  until  their  suc- 
cessors are  elected  and  have  qualified. 

The  minimum  number  of  directors  agrees  with  the  minimum  number  of  natural 
persons  required  to  start  a  bank.  The  first  election  of  directors  is  to  be  held  after 
the  bank  becomes  a  body  corporate,  (see  Section  5136,  par.  15,)  but  before  it  is  au- 
thorized to  commence  business.  The  number  must  be  fixed  in  the  articles  of  asso- 
ciation, and  can  be  changed  only  by  amendment  of  such  articles.  The  articles 
must  also  specify  the  day  of  annual  election,  which  must  be  some  day  in  January 
of  each  year.  The  directors  hold  office  until  their  successors  are  elected  and  have 
qualified,  and  it  is  therefore  better  at  elections  always  to  specify  to  what  retiring 
director  each  candidate  is  to  be  elected  the  successor,  as  in  the  event  of  failure  to 
qualify  on  the  part  of  a  newly-elected  director,  the  particular  predecessor  would 
hold  over. 

28.  Qualifications  of  Directors. 
Section  5146. — Every  director  must,  during  his  whole  term 
of  service,  be  a  citizen  of  the  United  States,  and  at  least  three- 
fourths  of  the  directors  must  have  resided  in  the  State,  Terri- 
tory, or  District  in  which  the  association  is  located,  for  at  least 
one  year  immediately  preceding  their  election,  and  must  be 
residents  therein  during  their  continuance  in  office.  Every 
director  must  own,  in  his  own  right,  at  least  ten  shares  of  the 
capital  stock  of  the  association  of  which  he  is  a  director.  Any 
director  who  ceases  to  be  the  owner  of  ten  shares  of  the  stock, 
or  who  becomes  in  any  other  manner  disqualified,  shall  thereby 
vacate  his  place. 

This  section  is  very  plain.     No  one  unless  he  is  a  citizen  of  the  United  Stat 

be  a  director.     It  is  therefore  a  question  whether  a  woman  can  be  a  director,  aa  the 

term  i  itizen  implies  full  power  to  partake  in  the  Government  by  voting.     Women 

however,  acted  as  directors  of  National  banks  and  the  Comptroller's  office  has 

not  objected.     It  is  perhaps  a  matter  that  more  properly  belongs  to  the  courts,  and 


20 

when  some  question  arises  as  to  the  validity  of  the  acts  of  women  who  act  as  bank 
directors  the  question  will  doubtless  be  authoritatively  settled.  The  section  provides 
for  non-resident  directors.  (See  in  this  connection  remarks  under  Section  5239, 
par.  118.)  The  words  "in  his  own  right"  mean  standing  in  his  own  name,  and  not 
in  his  name  as  executor  or  guardian,  <kc.  He  must  cease  to  be  the  owner  of  the 
necessary  ten  shares  to  render  his  place  vacant.  Thus  the  hypothecation  of  his 
necessary  ten  shares  during  his  term  of  office,  unless  a  transfer  were  made  to  an- 
other name,  would  not  perhaps  disqualify.  (See  Section  5146,  par.  29.)  A  director 
might  cease  to  reside  in  the  place  where  the  bank  was  located  when  there  was 
already  a  full  complement  of  non-resident  directors ;  it  would  then  be  necessary  to 
appoint  a  resident  director  in  place  of  one  of  the  non-residents;  which  one  would  be 
a  question  for  agreement. 

29.   Oath  Required  from  Directors. 

Section  5147. — Each  director,  when  appointed  or  elected, 
shall  take  an  oath  that  he  will,  so  far  as  the  duty  devolves  on 
him,  diligently  and  honestly  administer  trie  affairs  of  such 
association,  and  will  not  knowingly  violate,  or  willingly  per- 
mit to  be  violated,  any  of  the  provisions  of  this  Title,  and 
that  he  is  the  owner  in  good  faith,  and  in  his  own  right,  of  the 
number  of  shares  of  stock  required  by  this  Title,  subscribed 
by  him,  or  standing  in  his  name  on  the  books  of  the  associa- 
tion, and  that  the  same  is  not  hypothecated,  or  in  any  way 
pledged,  as  security  for  any  loan  or  debt.  Such  oath,  sub- 
scribed by  the  director  making  it,  and  certified  by  the  officer 
before  whom  it  is  taken,  shall  be  immediately  transmitted  to 
the  Comptroller  of  the  Currency,  and  shall  be  filed  and  pre- 
served in  his  office. 

These  oaths  are  to  be  sent  after  every  election  to  the  Comptroller's  office.  By 
this  oath  the  newly-elected  directors  bind  themselves  and  become  liable  for  all 
illegal  or  criminal  actions.  It  may  be  taken  before  a  notary  public  or  any  other 
officer  having  an  official  seal  authorized  to  take  oaths  in  the  State  where  the  bank 
is  located.  (See  Act  of  February  26th,  1881,  p.  106,  this  work.)  A  director  needs 
only  ten  shares  duly  disencumbered  and  held  as  specified  in  the  section  to  qualify 
him.  He  may  have  shares  additional  to  which  he  has  only  a  quasi  title.  (See 
Section  5146,  par.  29.) 

30.  Vacancies:  how  Pilled. 

Section  5148. — Any  vacancy  in  the  board  shall  be  filled 
by  appointment  by  the  remaining  directors,  and  any  director 
so  appointed  shall  hold  his  place  until  the  next  election. 

This  section  is  held  to  be  mandatory  when  a  vacancy  occurs  in  the  board  either 
by  disqualification  or  otherwise  :  it  must  be  filled  by  appointment  by  the  remaining 
directors.     Cases  of  disagreement  among  the  remaining  directors  may  arise,  and 


21 

apparent  difficulties  may  occur  from  various  causes ;  such  as  the  by-law  requiring 
four  as  a  quorum  when  there  are  two  vacancies  in  a  total  of  five  directors.  In  such 
a  case  as  this  the  requirement  of  law  would  doubtless  overrule  the  by-law,  and  the 
three  directors  could  appoint. 

31.  Proceedings  where  no  Election  is  Held. 
Section  5149. — If  from  any  cause  an  election  of  directors  is 
not  made  at  the  time  appointed,  the  association  shall  not  for 
that  cause  be  dissolved,  but  an  election  may  be  held  on  any 
subsequent  day,  thirty  days'  notice  thereof  in  all  cases  having 
been  given  in  a  newspaper  published  in  the  city,  town,  or 
county  in  which  the  association  is  located ;  and  if  no  news- 
paper is  published  in  such  city,  town,  or  county,  such  notice 
shall  be  published  in  a  newspaper  published  nearest  thereto. 
If  the  articles  of  association  do  not  fix  the  day  on  which  the 
election  shall  held,  or  if  no  election  is  held  on  the  day  fixed, 
the  day  for  the  election  shall  be  designated  by  the  board  of 
directors  in  their  by-laws,  or  otherwise  ;  or  if  the  directors  fail 
to  fix  the  day,  shareholders  representing  two-thirds  of  the 
shares  may  do  so. 

The  presence  of  this  section  in  the  law  shows  the  importance  attached  by  the 
legislators  to  the  exercise  of  control  over  the  management  of  the  bank  by  stock- 
holders. Precaution  is  taken  that  the  annual  election  shall  not  be  neglected  by  the 
directors  who  might  perhaps  desire  to  hold  over.  If  the  election  is  from  any  cause 
omitted,  the  directors  have  the  power  to  cause  an  election  to  be  held  on  a  subse- 
quent day  by  giving  notice  by  publication.  A  failure  to  name  a  day  in  the  articles 
of  association  may  be  remedied  by  the  directors  in  the  by-laws  or  otherwise.  But  in 
the  event  of  the  failure  of  directors  to  fix  a  day,  either  when  no  day  has  been  fixed 
in  the  articles  of  association  or  by-laws,  or  when  election  has  not  been  held  on  the 
day  fixed,  two-thirds  of  the  stock  may  fix  a  day.  It  would  seem,  therefore,  that 
unless  two-thirds  of  the  stock  were  dissatisfied  with  an  existing  board  of  directors, 
such  board,  by  neglecting  to  have  elections  held,  might  retain  office  for  an  indefinite 
period.  The  Comptroller  might,  perhaps,  require  them  to  renew  their  oaths  each 
year,  or  he  might  construe  the  law  to  be  mandatory  as  to  annual  elections;  in 
which  case  the  bank  would  have  to  be  guided  by  the  Comptroller's  construction, 
unless  it  wished  to  contest  the  matter  in  the  courts  or  have  the  question  decided  by 
some  law  officer  of  the  Government.  In  the  event  of  any  difference  of  opinion 
upon  a  legal  point  between  a  bank  and  the  Comptroller,  the  bank  can  request  that 
it  be  referred  to  the  Secretary  of  the  Treasury  or  the  Attorney  General  of  the  United 
States  for  an  opinion. 

32.    The  President  must  be  a  Director. 
Section  5150. — One  of  the  directors,  to  be  chosen  by  the 
board,  shall  be  the  president  of  the  board. 

Whether  the  president  of  the  board  of  directors  is  of  necessity  the  president  of 
the  bank  may,  perhaps,  be  a  question  ;  but  it  would  appear  to  be  the  intention  of  the 


22 

law  that  the  director  chosen  by  the  board  to  act  as  its  president  is  the  president  of 
the  bank,  and  entitled  to  perform  all  duties  as  such. 

There  is  an  immense  amount  of  information  on  this  subject,  but  it  cannot  well  be 
given  in  the  space  which  can  be  spared  in  this  work.  Inquiries  addressed  to  the 
publishers  on  this  subject  will  be  carefully  answered. 

33.  Individual  Liability  of  Shareholders. 
Section  5151. — The  shareholders  of  every  National  banking 
association  shall  be  held  individually  responsible,  equally  and 
ratably,  and  not  one  for  another,  for  all  contracts,  debts,  and 
engagements  of  such  association,  to  the  extent  of  the  amount 
of  their  stock  therein,  at  the  par  value  thereof,  in  addition  to 
the  amount  invested  in  such  shares  ;  except  that  shareholders 
of  any  banking  association  now  existing  under  State  laws, 
having  not  less  than  five  millions  of  dollars  of  capital  actually 
paid  in,  and  a  surplus  of  twenty  per  centum  on  hand,  both  to 
be  determined  by  the  Comptroller  of  the  Currency,  shall  be 
liable  only  to  the  amount  invested  in  their  shares  ;  and  such 
surplus  of  twenty  per  centum  shall  be  kept  undiminished,  and 
be  in  addition  to  the  surplus  provided  for  in  this  Title;  and  if 
at  any  time  there  is  a  deficiency  in  such  surplus  of  twenty  per 
centum,  such  association  shall  not  pay  any  dividends  to  its 
shareholders  until  the  deficiency  is  made  good  ;  and  in  case  of 
such  deficiency,  the  Comptroller  of  the  Currency  may  compel 
the  association  to  close  its  business  and  wind  up  its  affairs 
under  the  provisions  of  Chapter  four  *  of  this  Title. 

The  extent  and  kind  of  liability  of  shareholders  of  National  banks  has  been  passed 
on  by  the  United  States  Supreme  Court  in  the  case  of  United  States  v.  Knox,  102 
U.  S.,  page  422.  The  definition  of  this  liability  given  in  Morse  on  Banking  was 
sustained  in  that  decision:  "The  liability  of  each  stockholder  is  precisely  for  his 
ratable  proportion  of  that  indebtedness  of  the  bank  which  is  to  be  borne  by  the 
stockholders.  It  is  for  his  share  of  such  total  indebtedness,  not  for  his  proportion 
of  each  item  thereof.  Neither  are  the  solvent  shareholders,  or  those  who  can  be 
come  at  for  collection,  liable  to  assessment  beyond  the  proportional  amount  above 
stated  by  reason  of  the  insolvency  or  inaccessibility  of  others  of  the  shareholders. 
Those  who  are  solvent  and  accessible  have  not  the  burden  of  paying  off  the  sum 
which  is  due  from  all  together;  only  their  own  proportionate  share."  Transfers  for 
the  purpose  of  avoiding  this  liability  have  generally  been  held  invalid  in  the  courts. 
The  Comptroller  decides  when  an  assessment  on  the  liability  under  this  clause  shall 
be  made.  In  selling  and  transferring  stock  it  is  necessary  to  see  that  their  liability 
is  transferred  ;  in  other  words,  that  the  stock  appears  on  the  books  of  the  bank  in 
the  name  of  the  transferee.     As  to  the  exception  in  the  section,  there  is  no  National 

*  Chapter  V  of  this  work. 


23 

bank  in  existence  that  it  can  apply  to.  The  liability  is  for  the  par  value  of  shares 
held  in  addition  to  what  may  have  been  invested  in  such  shares.  Thus  the  holder 
of  a  $100  share  of  National  bank  stock  is,  if  such  bank  becomes  insolvent,  liable  to 
the  creditors  for  $100  more  if  100  per  cent,  of  the  stock  is  necessary  to  meet  the 
deficiency  in  the  assets. 

34.  Executors,  Trustees,  &c.,  not  Personally  Liable. 
Section  5152. — Persons  holding  stock  as  executors,  admin- 
istrators, guardians,  or  trustees,  shall  not  be  personally  subject 
to  any  liabilities  as  stockholders ;  but  the  estates  and  funds  in 
their  hands  shall  be  liable  in  like  manner  and  to  the  same  ex- 
tent as  the  testator,  intestate,  ward,  or  person  interested  in 
such  trust-funds  would  be,  if  living  and  competent  to  act  and 
hold  the  stock  in  his  own  name. 

It  is  best  for  executors,  administrators,  &c,  to  have  it  clearly  set  forth  on  the 
books  of  the  bank  that  they  hold  stock  as  such.  If  they  hold  forth  to  the  public 
that  they  hold  stock  personally,  they  will  doubtless  be  held  liable  personally  by  the 
courts,  no  matter  what  may  have  been  the  real  state  of  the  case. 

35.  Depositaries  of  Public  Moneys. 
Section  5153. — All  National  banking  associations,  desig- 
nated for  that  purpose  by  the  Secretary  of  the  Treasury,  shall 
be  depositaries  of  public  money,  except  receipts  from  customs, 
under  such  regulations  as  may  be  prescribed  by  the  Secretary ; 
and  they  may  also  be  employed  as  financial  agents  of  the  Gov- 
ernment ;  and  they  shall  perform  all  such  reasonable  duties, 
as  depositaries  of  public  moneys  and  financial  agents  of  the 
Government,  as  may  be  required  of  them.  The  Secretary  of 
the  Treasury  shall  require  the  associations  thus  designated  to 
give  satisfactory  security,  by  the  deposit  of  United  States 
bonds  and  otherwise,  for  the  safe-keeping  and  prompt  payment 
of  the  public  money  deposited  with  them,  and  for  the  faithful 
performance  of  their  duties  as  financial  agents  of  the  Govern- 
ment. And  every  association  so  designated  as  receiver  or  de- 
positary of  the  public  money  shall  take  and  receive  at  par  all 
of  the  National  currency  bills,  by  whatever  association  issued, 
which  have  been  paid  into  the  Government  for  internal  revenue, 
or  for  loans  or  stocks. 

All  arrangements  to  become  public  depositaries  must  be  made  with  the  Secretary 
of  the  Treasury.  The  security  required  is  within  the  discretion  of  the  Secretary. 
The  requirement  at  present  is  United  States  bonds,  or  bonds  guaranteed  by  the 
United  States,  such  as  Pacific  currency  sixes  or  District  of  Columbia  3-65  bonds. 


24 

A  deposit  is  allowed  to  the  extent  of  the  market  value  of  fours  and  four-and-a-halfs, 
but  usually  the  deposit  is  kept  down  below  the  value  of  the  security.  The  Secre- 
tary of  the  Treasury  could  legally  accept  other  security  than  United  States  bonds  if 
he  saw  fit. 

36.  Conversion  of  State  into  National  Banks. 
Section  5154. — Any  bank  incorporated  by  special  law,  or 
any  banking  institution  organized  under  a  general  law  of  any 
State,  may  become  a  National  association  under  this  Title  by 
the  name  prescribed  in  its  organization  certificate  ;  and  in  such 
case  the  articles  of  association  and  the  organization  certificate 
may  be  executed  by  a  majority  of  the  directors  of  the  bank  or 
banking  institution ;  and  the  certificate  shall  declare  that  the 
owners  of  two-thirds  of  the  capital  stock  have  authorized  the 
directors  to  make  such  certificate,  and  to  change  and  convert 
the  bank  or  banking  institution  into  a  National  association. 
A  majority  of  the  directors,  after  executing  the  articles  of  as- 
sociation and  organization  certificate,  shall  have  power  to  exe- 
cute all  other  papers,  and  to  do  whatever  may  be  required  to 
make  its  organization  perfect  and  complete  as  a  National  asso- 
ciation. The  shares  of  any  such  bank  may  continue  to  be  for 
the  same  amount  each  as  they  were  before  the  conversion,  and 
the  directors  may  continue  to  be  the  directors  of  the  association 
until  others  are  elected  or  appointed  in  accordance  with  the 
provisions  of  this  chapter ;  and  any  State  bank  which  is  a 
stockholder  in  any  other  bank,  by  authority  of  State  laws,  may 
continue  to  hold  its  stock,  although  either  bank,  or  both,  may 
be  organized  under  and  have  accepted  the  provisions  of  this 
Title.  When  the  Comptroller  of  the  Currency  has  given  to 
such  association  a  certificate,  under  his  hand  and  official  seal, 
that  the  provisions  of  this  Title  have  been  complied  with,  and 
that  it  is  authorized  to  commence  the  business  of  banking,  the 
association  shall  have  the  same  powers  and  privileges,  and 
shall  be  subject  to  the  same  duties,  responsibilities  and  rules, 
in  all  respects,  as  are  prescribed  for  other  associations  originally 
organized  as  National  banking  associations,  and  shall  be  held 
and  regarded  as  such  an  association.  But  no  such  association 
shall  have  a  less  capital  than  the  amount  prescribed  for  asso- 
ciations organized  under  this  Title. 

This  section  was  enacted  in  order  to  induce  State  banks  to  enter  the  National  system . 
The  authority  of  two-thirds  of  the  stock  is  required  to  enable  the  directors  to  act. 


ok  rue  r 


Many  States  have  passed  enabling  acts,  both  to  enable  State  banks  to  become 
National  banks  and  to  enable  National  banks  to  become  State  banks.  State  banks 
intending  to  convert  into  National  banks  should  be  guided  as  to  the  closing  of  the 
affairs  under  the  State  charter  by  the  State  statute 

From  the  special  privilege  granted  to  converted  State  banks  to  continue  to  hold 
the  stock  in  other  banks  they  held  when  State  banks,  it  may  be  inferred  that  the 
power  of  holding  stock  in  other  banks  was  not  intended  to  be  granted  to  all  National 
associations. 

37.  State  Banks  having  Branches. 
Section  5155. — It  shall  be  lawful  for  any  bank  or  banking 
association,  organized  under  State  laws,  and  having  branches, 
the  capital  being  joint  and  assigned  to  and  used  by  the  mother- 
bank  and  branches  in  definite  proportions,  to  become  a  National 
banking  association,  in  conformity  with  existing  laws,  and  to 
retain  and  keep  in  operation  its  branches,  or  such  one  or  more 
of  them  as  it  may  elect  to  retain,  the  amount  of  the  circula- 
tion redeemable  at  the  mother-bank,  and  each  branch,  to  be 
regulated  by  the  amount  of  capital  assigned  to  and  used  by 
each. 

As  was  remarked  in  reference  to  the  last  section  in  regard  to  holding  bank  stock, 
so  it  may  be  said  that  the  granting  of  the  special  privilege  of  having  branches  un- 
der certain  circumstances  to  converted  State  banks,  implies  that  it  was  not  intended 
that  National  banks  generally  should  have  branches. 

38.  Rights  of  Associations  Organized  under  Act  of  1863. 
Section  5156. — Nothing  in  this  Title  shall  affect  any  ap- 
pointments made,  acts  done,  or  proceedings  had  or  commenced 
prior  to  the  third  day  of  June,  eighteen  hundred  and  sixty- 
four,  in  or  toward  the  organization  of  any  National  banking 
association  under  the  Act  of  February  twenty-five,  eighteen 
hundred  and  sixty-three ;  but  all  associations  which,  on  the 
third  day  of  June,  eighteen  hundred  and  sixty-four,  were  or- 
ganized, or  commenced  to  be  organized,  under  that  Act  shall 
enjoy  all  the  rights  and  privileges  granted,  and  be  subject  to 
all  the  duties,  liabilities,  and  restrictions  imposed  by  this  Title, 
notwithstanding  all  the  steps  prescribed  by  this  Title  for  the 
organization  of  associations  were  not  pursued,  if  such  associa- 
tions were  duly  organized  under  that  Act. 

The  banks  organized  under  the  original  National  Banking  Act  of  February  2")th, 
1863,  have  all  these  vested  rights  under  the  earlier  Act  secured  to  them  by  this 
section. 


26 


CHAPTER   III. 
OBTAINING   AND   ISSUING   CIRCULATING  NOTES. 


39.  Applies  to  all  National  Banks. 
Section  5157. — The  provisions  of  Chapters  two,  three,  and 
four :::  of  this  Title,  which  are  expressed  without  restrictive 
words,  as  applying  to  "National  banking  associations,"  or  to 
( '  associations, ' '  apply  to  all  associations  organized  to  carry  on 
the  business  of  banking  under  any  Act  of  Congress. 

This  section  gives  the  same  rights  to  all  National  banking  associations  at  what- 
ever date  organized. 

40.   United  States  Bonds  Denned. 

Section  5158. — The  term  "United  States  bonds,"  as  used 
throughout  this  chapter,  shall  be  construed  to  mean  registered 
bonds  of  the  United  States. 

41.   United  States  Bonds  to  be  Deposited. 

Section  5159. — Every  association,  after  having  complied 
with  the  provisions  of  this  Title,  preliminary  to  the  commence- 
ment of  the  banking  business,  and  before  it  shall  be  author- 
ized to  commence  banking  business  under  this  Title,  shall 
transfer  and  deliver  to  the  Treasurer  of  the  United  States  any 
United  States  registered  bonds,  bearing  interest,  to  an  amount 
not  less  than  thirty  thousand  dollars  and  not  less  than  one- 
third  of  the  capital  stock  paid  in.  Such  bonds  shall  be  re- 
ceived by  the  Treasurer  upon  deposit,  and  shall  be  by  him 
safely  kept  in  his  office,  until  they  shall  be  otherwise  disposed 
of,in  pursuance  of  the  provisions  of  this  Title. 

Under  the  Act  of  June  20th,  1874,  Section  4,  page  87,  the  maximum  amount  which 
any  National  bank  is  required  to  deposit,  whatever  its  capital,  is  $50,000.  By  the 
Act  of  July  12th,  1882,  Section  8,  page  107, any  bank  having  a  capital  of  $150,000 
or  less  can  be  organized  on  a  deposit  of  bonds  equal  to  one  quarter  of  such  capital. 
Therefore  banks  with  a  capital  over  $150,000  must  deposit  $50,000  in  bonds;  those 
with  $150,000  or  less,  one  quarter  of  such  capital. 

42.   Increase  and  Decrease  of  Capital  and  Bonds. 

Section  5160. — The  deposits  of  bonds  made  by  each  associ- 

*  Chapters  III,  IV,  and  V  of  this  work. 


27 

ation  shall  be  increased  as  its  capital  may  be  paid  up  or  in- 
creased, so  that  every  association  shall  at  all  times  have  on 
deposit  with  the  Treasurer  registered  United  States  bonds  to 
the  amount  of  at  least  one-third  of  its  capital  stock  actually 
paid  in.  And  any  association  that  may  desire  to  reduce  its 
capital  or  close  up  its  business  and  dissolve  its  organization, 
may  take  up  its  bonds  upon  returning  to  the  Comptroller  its 
circulating  notes  in  the  proportion  hereinafter  required,  or  may 
take  up  any  excess  of  bonds  beyond  one-third  of  its  capital 
stock,  and  upon  which  no  circulating  notes  have  been  delivered. 

As  stated  uuder  the  preceding  section,  later  laws  have  changed  the  limit  of  bonds, 
and  the  limits  prescribed  in  these  later  laws  must  be  observed  in  increasing  or  re- 
ducing capital  stock.  Banks  may  still,  however,  return  circulation  under  this  sec- 
tion, and  take  up  eiccess  of  bonds  above  legal  limit  on  which  no  circulating  notes 
have  been  delivered. 

43.  Exchange  of  Coupon  Bonds. 
Section  5161. — To  facilitate  a  compliance  with  the  two  pre- 
ceding sections,  the  Secretary  of  the  Treasury  is  authorized  to 
receive  from  any  association,  and  cancel,  any  United  States 
coupon  bonds,  and  to  issue  in  lieu  thereof  registered  bonds  of 
like  amount,  bearing  a  like  rate  of  interest  and  having  the 
same  time  to  run. 

Coupon  bonds,  as  well  as  registered  bonds  properly  transferred,  are  usually  sent 
to  the  office  of  the  Comptroller  of  the  Currency  by  registered  mail  or  express,  and 
the  bond  clerk  in  that  office  takes  the  necessary  steps  to  convert  the  coupon  bonds 
into  registered,  and  to  turn  over  the  bonds  in  due  course  to  the  custody  of  the 
Treasurer  of  the  United  States. 

44.  Transfer  of  Bonds  to  and  by  Treasurer. 
Section  5162. — All  transfers  of  United  States  bonds  made  by 
any  association  under  the  provisions  of  this  Title  shall  be  made 
to  the  Treasurer  of  the  United  States  in  trust  for  the  associa- 
tion, with  a  memorandum  written  or  printed  on  each  bond, 
and  signed  by  the  cashier  or  some  other  officer  of  the  associa- 
tion making  the  deposit.  A  receipt  shall  be  given  to  the  as- 
sociation by  the  Comptroller  of  the  Currency,  or  by  a  clerk 
appointed  by  him  for  that  purpose,  stating  that  the  bond  is 
held  in  trust  for  the  association  on  whose  behalf  the  transfer 
is  made,  and  as  security  for  the  redemption  and  payment  of 
any  circulating  notes  that  have  been  or  may  be  delivered  to 
such  association.      Xo  assignment  or  transfer  of  any  such  bond 


28 

by  the  Treasurer  shall  be  deemed  valid  unless  countersigned 
by  the  Comptroller  of  the  Currency. 

The  bonds  when  sent  to  the  Comptroller  should  bear  the  memorandum,  written 
or  printed,  mentioned,  signed  by  the  cashier,  that  they  are  transferred  to  the  Treas- 
urer in  trust  for  the  association.  A  receipt  is  given  by  the  Comptroller  of  the  Cur- 
rency, and  when  the  bonds  are  placed  in  the  custody  of  the  Treasurer,  a  receipt  is 
given  in  duplicate  by  that  officer — one  is  sent  to  the  bank  and  the  other  to  the  Comp- 
troller of  the  Currency.  The  Comptroller  and  Treasurer  will  not  permit  the  with- 
drawal and  transfer  of  bonds  from  the  Treasurer  except  upon  authority  given  by 
the  board  of  directors  to  transfer  the  same  to  the  designated  transferee.  When 
bonds  are  so  to  be  withdrawn,  the  Treasurer's  duplicate  receipt  held  by  the  bank 
must  be  sent  to  the  Comptroller  with  the  directors'  resolution. 

45.  Registry  of  Bond  Transfers. 
Section  5163. — The  Comptroller  of  the  Currency  shall  keep 
in  his  office  a  book,  in  which  he  shall  cause  to  be  entered,  im- 
mediately upon  countersigning  it,  every  transfer  or  assignment 
by  the  Treasurer  of  any  bonds  belonging  to  a  National  bank- 
ing association  presented  for  his  signature.  He  shall  state  in 
such  entry  the  name  of  the  association  from  whose  account 
the  transfer  is  made,  the  name  of  the  party  to  whom  it  is  made, 
and  the  par  value  of  the  bonds  transferred. 

Bonds  received  in  the  Comptroller's  office  are  first  receipted  for  to  the  express 
company  or  post  office,  and  are  then  entered  in  the  books  of  the  office.  The  sub- 
sequent history  of  each  bond  can  thus  be  accurately  traced. 

46.  Association  to  be  Advised  of  Transfers. 
Section  5164. — The  Comptroller  of  the  Currency  shall,  im- 
mediately upon  countersigning  and  entering  any  transfer  or 
assignment  by  the  Treasurer  of  any  bonds  belonging  to  a 
National  banking  association,  advise  by  mail  the  association 
from  whose  accounts  the  transfer  is  made  of  the  kind  and  nu- 
merical designation  of  the  bonds  and  the  amount  thereof  so 
transferred. 

Advice  to  the  bank  is  required  as  an  additional  precaution  against  erroneous  or 
fraudulent  transfers  from  its  account  in  trust. 

47.  Comptroller  and  Treasurer  to  have  Access  to  Books. 
Section  5165. — The  Comptroller  of  the  Currency  shall  have 
at  all  times,  during  office  hours,  access  to  the  books  of  the 
Treasurer  of  the  United  States  for  the  purpose  of  ascertaining 
the  correctness  of  any  transfer  or  assignment  of  the  bonds  de- 
posited by  an   association,  presented    to   the   Comptroller  to 


29 

countersign;  and  the  Treasurer  shall  have  the  like  access  to 
the  book  mentioned  in  section  fifty-one  hundred  and  sixty- 
three,  during  office  hours,  to  ascertain  the  correctness  of  the 
entries  in  the  same;  and  the  Comptroller  shall  also  at  all  times 
have  access  to  the  bonds  on  deposit  with  the  Treasurer  to  as- 
certain their  amount  and  condition. 

This  section  prescribes  further  checks  on  mistakes  or  frauds. 

48.  Annual  Examination  of  Bonds. 
Section  5166. — Every  association  having  bonds  deposited  in 
the  office  of  the  Treasurer  of  the  United  States  shall,  once  or 
oftener  in  each  fiscal  year,  examine  and  compare  the  bonds 
pledged  by  the  association  with  the  books  of  the  Comptroller  of 
the  Currency  and  with  the  accounts  of  the  association,  and,  if 
they  are  found  correct,  to  execute  to  the  Treasurer  a  certificate 
setting  forth  the  different  kinds  and  the  amounts  thereof,  and 
that  the  same  are  in  the  possession  and  custody  of  the  Treasurer 
at  the  date  of  the  certificate.  Such  examination  shall  be  made 
at  such  time  or  times  during  the  ordinary  business  hours  as  the 
Treasurer  and  the  Comptroller,  respectively,  may  select,  and 
may  be  made  by  an  officer  or  agent  of  such  association  duly  ap- 
pointed in  writing  for  that  purpose;  and  his  certificate  before 
mentioned  shall  be  of  like  force  and  validity  as  if  executed 
by  the  president  or  cashier.  A  duplicate  of  such  certificate, 
signed  by  the  Treasurer,  shall  be  retained  by  the  association. 

This  section  throws  upon  the  association  the  direct  responsibility  of  ascertaining 
the  safety  and  actual  presence  on  deposit  of  the  bonds  held  in  trust  for  it  by  the 
Treasurer.     The  examination  is  usually  made  by  the  bank's  accredited  agent. 

49.  Bonds  Held  as  Security  for  Circulation,  Sic. 
Section  5167. — The  bonds  transferred  to  and  deposited  with 
the  Treasurer  of  the  United  States  by  any  association,  for  the 
security  of  its  circulating  notes,  shall  be  held  exclusively  for 
that  purpose  until  such  notes  are  redeemed,  except  as  provided 
in  this  Title.  The  Comptroller  of  the  Currency  shall  give  to 
any  such  association  powers  of  attorney  to  receive  and  appro- 
priate to  its  own  use  the  interest  on  the  bonds  which  it  has  so 
transferred  to  the  Treasurer;  but  such  power  shall  become  in- 
operative whenever  such  association  fails  to  redeem  its  circu- 
lating notes.  Whenever  the  market  or  cash  value  of  any 
bonds  thus  deposited  with  the  Treasurer  is  reduced  below  the 


3° 

amount  of  the  circulation  issued  for  the  same,  the  Comptroller 
may  demand  and  receive  the  amount  of  such  depreciation  in 
other  United  States  bonds  at  cash  value,  or  in  money,  from  the 
association,  to  be  deposited  with  the  Treasurer  as  long  as  such 
depreciation  continues.  And  the  Comptroller,  upon  the  terms 
prescribed  by  the  Secretary  of  the  Treasury,  may  permit  an 
exchange  to  be  made  of  any  of  the  bonds  deposited  with  the 
Treasurer  by  any  association  for  other  bonds  of  the  United 
States  authorized  to  be  received  as  security  for  circulating 
notes,  if  he  is  of  opinion  that  such  an  exchange  can  be  made 
without  prejudice  to  the  United  States;  and  he  may  direct  the 
return  of  any  bonds  to  the  association  which  transferred  the 
same,  in  sums  of  not  less  than  one  thousand  dollars,  upon  the 
surrender  to  him  and  the  cancellation  of  a  proportionate 
amount  of  such  circulating  notes:  Provided,  That  the  remain- 
ing bonds  which  shall  have  been  transferred  by  the  association 
offering  to  surrender  circulating  notes  are  equal  to  the  amount 
required  for  the  circulating  notes  not  surrendered  by  such  as- 
sociation, *  and  that  the  amount  of  bonds  in  the  hands  of  the 
Treasurer  is  not  diminished  below  the  amount  required  to  be 
kept  on  deposit  with  him,  and  that  there  has  been  no  failure 
by  the  association  to  redeem  its  circulating  notes,  nor  any 
other  violation  by  it  of  the  provisions  of  this  Title,  f  and  that 
the  market  or  cash  value  of  the  remaining  bonds  is  not  below 
the  amount  required  for  the  circulation  issued  for  the  same. 

This  section  provides  the  means  of  obtaining  the  interest  on  those  bonds  held  in 
trust  by  associations.  This  interest  may  be  retained  in  certain  cases:  1st,  as  men- 
tioned in  this  section,  for  failure  to  redeem  circulating  notes ;  2d,  for  failure  to 
make  reports,  (see  Section  5213,  par.  89,  and  Section  5215,  par.  911  ;)  3d,  for  failure 
to  pay  taxes,  (see  Section  5217,  par.  93.) 

If  the  United  States  bonds  on  deposit  are  worth  less  in  the  market  than  the  cir- 
culation secured  by  the  same,  the  bank  can  be  required  to  make  the  security  equal 
to  the  face  value  of  its  notes  in  circulation,  but  not  the  10  per  cent,  margin,  as  is 
sometimes  stated.  Exchanges  of  bonds  must  be  made  by  going  through,  or  trans- 
ferring the  new  bonds  to  the  Treasurer  in  trust  and  having  the  old  bonds  trans- 
ferred to  the  bank,  but  such  exchange  is  a  matter  of  permission,  and  cannot  be 
demanded.     All  the  conditions  mentioned  in  the  section  must  be  observed. 

50.   Delivery  of  Circulation  to  Associations. 

Section  5 171. — Upon  a  deposit  of  bonds  as  prescribed  by 


*See  Act  of  June  20th,  18T4,  Section  4,  page  87. 
{Sections  5168,  5169,  and  5170,  pages  15  and  If!. 


3i 

sections  fifty-one  hundred  and  fifty-nine  and  fifty-one  hundred 
and  sixty,  the  association  making  the  same  shall  be  entitled 
to  receive  from  the  Comptroller  of  the  Currency  circulating 
notes  of  different  denominations,  in  blank,  registered  and 
countersigned  as  hereinafter  provided,  equal  in  amount  to 
ninety  per  centum  of  the  current  market  value  of  the  United 
States  bonds  so  transferred  and  delivered,  but  not  exceeding 
ninety  per  centum  of  the  amount  of  the  bonds  at  the  par  value 
thereof,  if  bearing  interest  at  a  rate  not  less  than  five  per  centum 
per  annum  :  Provided,  That  the  amount  of  circulating  notes 
to  be  furnished  to  each  association  shall  be  in  proportion  to  its 
paid-up  capital,  as  follows,  and  no  more: 

First.  To  each  association  whose  capital  does  not  exceed 
five  hundred  thousand  dollars,  ninety  per  centum  of  such  cap- 
ital. 

Second.  To  each  association  whose  capital  exceeds  five  hun- 
dred thousand  dollars,  but  does  not  exceed  one  million  of  dol- 
lars, eighty  per  centum  of  such  capital. 

Third.  To  each  association  whose  capital  exceeds  one  mill- 
ion of  dollars,  but  does  not  exceed  three  million[s]  of  dollars, 
seventy-five  per  centum  of  such  capital. 

Fourth.  To  each  association  whose  capital  exceeds  three 
millions  of  dollars,  sixty  per  centum  of  such  capital. 

Section  10  of  the  Act  of  July  12th,  1882,  per.  107.  provides  that  every  association 
may  receive  circulation  equal  to  90  per  cent,  of  their  capital  stock  without  regard 
to  amount  of  capital,  provided  bonds  are  deposited  to  secure  such  circulation.  The 
limit  of  circulation  in  proportion  to  bonds,  as  prescribed  by  Section  10  of  the  Act 
of  July  12th,  1882,  is  held  by  the  Department  to  be  the  same  as  in  this  section,  viz, 
not  to  exceed  90  per  cent,  of  the  par  value  of  the  bonds,  but  if  the  market  value  of 
such  bonds  are  below  par,  then  90  per  cent,  only  of  such  market  value.  This  view 
has  been  sustained  by  tenor  of  bills  introduced  in  Congress  to  give  a  larger  propor- 
tion of  circulation,  none  of  which  have  as  yet  become  law. 

51.  Printing  of  Circulating  Notes,  Denominations,  &c. 
Section  5172. — In  order  to  furnish  suitable  notes  for  cir- 
culation, the  Comptroller  of  the  Currency  shall,  under  the 
direction  of  the  Secretary  of  the  Treasury,  cause  plates  and 
dies  to  be  engraved,  in  the  best  manner  to  guard  against  coun- 
terfeiting and  fraudulent  alterations,  and  shall  have  printed 
therefrom,  and  numbered,  such  quantity  of  circulating  notes, 
in  blank,  of  the  denominations  of  one  dollar,  two  dollars,  three 


32 

dollars,  five  dollars,  ten  dollars,  twenty  dollars,  fifty  dollars, 
one  hundred  dollars,  five  hundred  dollars,  and  one  thousand 
dollars,  as  may  be  required  to  supply  the  associations  entitled 
to  receive  the  same.  Such  notes  shall  express  upon  their  face 
that  they  are  secured  by  United  States  bonds,  deposited  with 
the  Treasurer  of  the  United  States,  by  the  written  or  engraved 
signatures  of  the  Treasurer  and  Register,  and  by  the  imprint 
of  the  seal  of  the  Treasury ;  and  shall  also  express  upon  their 
face  the  promise  of  the  association  receiving  the  same  to  pay 
on  demand,  attested  by  the  signatures  of  the  president  or  vice- 
president  and  cashier;  and  shall  bear  such  devices  and  such 
other  statements,  and  shall  be  in  such  form,  as  the  Secretary 
of  the  Treasury  shall,  by  regulation,  direct. 

52.  Plates  and  Dies,  and  Expenses  of  Bureau. 
Section  5173. — The  plates  and  special  dies  to  be  procured 
by  the  Comptroller  of  the  Currency  for  the  printing  of  such 
circulating  notes  shall  remain  under  his  control  and  direction, 
and  the  expenses  necessarily  incurred  in  executing  the  laws 
respecting  the  procuring  of  such  notes,  and  all  other  expenses 
of  the  Bureau  of  the  Currency,  shall  be  paid  out  of  the  proceeds 
of  the  taxes  or  duties  assessed  and  collected  on  the  circulation 
of  National  banking  associations  under  this  Title. 

It  was  the  intention  of  the  original  Banking  Act  that  all  expense  of  preparing 
plates  for  printing  and  for  the  printing  of  National  bank  notes  should  be  paid  from 
the  proceeds  of  taxes  or  duties  assessed  on  circulation.  The  tax  on  circulation  still 
continues  to  be  demanded,  but  under  the  provisions  of  Section  3  of  the  Act  of  June 
20th,  1874,  banks  are  now  required  to  pay  the  expense  of  preparing  the  plates  for 
printing  their  notes.  It  is,  perhaps,  a  question  whether  banks  organized  prior  to 
the  passage  of  the  Act  of  June  20th,  1874,  can  be  required  to  do  so.  The  Comptroller 
of  the  Currency,  on  page  41  of  his  report  for  1885,  makes  some  reference  to  this 
matter  of  the  expense  of  preparing  and  printing  National  bank  notes,  as  well  as 
of  the  expenses  of  the  Comptroller's  office  and  the  National  bank  redemption 
agency. 

53.  Annual  Examination  of  Plates,  Dies,  &c. 
Section  5174. — The  Comptroller  of  the  Currency  shall 
cause  to  be  examined,  each  year,  the  plates,  dies,  but-pieces, 
[bed-pieces,]  and  other  material  from  which  the  National  bank 
circulation  is  printed,  in  whole  or  in  part,  and  file  in  his  office 
annually  a  correct  list  of  the  same.  Such  material  as  shall  have 
been  used  in  the  printing  of  the  notes  of  associations  which 


33 

are  in  liquidation,  or  have  closed  business,  shall  be  destroyed 
under  such  regulations  as  shall  be  prescribed  by  the  Comp- 
troller of  the  Currency  and  approved  by  the  Secretary  of  the 
Treasury.  The  expenses  of  any  such  examination  or  destruc- 
tion shall  be  paid  out  of  any  appropriation  made  by  Congress 
for  the  special  examination  of  National  banks  and  bank-note 
plates. 

54.    Issue  of  Small  Notes  Limited. 

Section  5175. — Not  more  than  one-sixth  part  of  the  notes 
furnished  to  any  association  shall  be  of  a  less  denomination 
than  five  dollars.  After  specie  payments  are  resumed  no  asso- 
ciation shall  be  furnished  with  notes  of  a  less  denomination 
than  five  dollars. 

55.    Amount  of  Circulation  Limited. 

Section  5176. — No  banking  association  organized  subse- 
quent to  the  twelfth  day  of  July,  eighteen  hundred  and  sev- 
enty, shall  have  a  circulation  in  excess  of  five  hundred  thou- 
sand dollars.* 

Any  association  may  now  have  circulation  equal  to  90  per  cent,  of  its  capital, 
whatever  that  capital,  provided  it  places  a  sufficient  amount  of  bonds  on  deposit. 

56.  Aggregate  Amount  of  Circulating  Notes. 
Section  5177. — The  aggregate  amount  of  circulating  notes 
issued  under  the  Act  of  February  twenty-five,  eighteen  hun- 
dred and  sixty-three,  and  under  the  Act  of  June  three,  eighteen 
hundred  and  sixty-four,  and  under  section  one  of  the  Act  of 
July  twelve,  eighteen  hundred  and  seventy,  and  under  this 
Title,  shall  not  exceed  three  hundred  and  fifty-four  millions 
of  dollars. 

Superseded  by  Act  of  January  14th,  1875,  sec.  3,  page  94. 

No  limit  now  on  the  aggregate  circulation  which  may  be  issued.  National  bank 
circulation  is  at  present  kept  down  by  competition  of  Government  paper  and  by  the 
retention  of  the  war  tax  on  circulation. 

57.    Apportionment  of  Circulating  Notes. 
Section  5178. — One  hundred  and  fifty  millions  of  dollars  of 
the  entire  amount  of  circulating  notes  authorized  to  be  issued 
shall  be  apportioned  to  associations  in  the  States,  in  the  Terri- 
tories, and  in  the  District  of  Columbia,  according  to  represen- 

*  Repealed  by  Act  of  July  12th,  1882,  sec.  10,  page  107. 
3 


34 

tative  population.  One  hundred  and  fifty  millions  shall  be 
apportioned  by  the  Secretary  of  the  Treasury  among  associa- 
tions formed  in  the  several  States,  in  the  Territories,  and  in 
the  District  of  Columbia,  having  due  regard  to  the  existing 
banking  capital,  resources,  and  business  of  such  States,  Terri- 
tories, and  District.  The  remaining  fifty-four  millions  shall  be 
apportioned  among  associations  in  States  and  Territories  hav- 
ing, under  the  apportionments  above  prescribed,  less  than  their 
full  proportion  of  the  aggregate  amount  of  notes  authorized, 
which  made  due  application  for  circulating  notes  prior  to  the 
twelfth  day  of  July,  eighteen  hundred  and  seventy-one.  Any 
remainder  of  such  fifty-four  millions  shall  be  issued  to  banking 
associations  applying  for  circulating  notes  in  other  States  or 
Territories  having  less  than  their  proportion. 

Obsolete.     Superseded  by  Act  of  January  14th,  1875,  sec.  3,  page  94. 

58.  Distribution  of  Circulating  Notes. 
Section  5179. — In  order  to  secure  a  more  equitable  distribu- 
tion of  the  National  banking  currency,  there  may  be  issued 
circulating  notes  to  banking  associations  organized  in  States 
and  Territories  having  less  than  their  proportion,  and  the 
amount  of  circulation  herein  authorized  shall,  under  the  direc- 
tion of  the  Secretary  of  the  Treasury,  as  it  may  be  required 
for  this  purpose,  be  withdrawn,  as  herein  provided,  from  bank- 
ing associations  organized  in  States  having  more  than  their 
proportion,  but  the  amount  so  withdrawn  shall  not  exceed 
twenty-five  million  dollars  :  Provided,  That  no  circulation 
shall  be  withdrawn  under  the  provisions  of  this  section  until 
after  the  fifty-four  millions  granted  in  the  first  section  of  the 
act  of  July  twelfth,  eighteen  hundred  and  seventy,  shall  have 
been  taken  up. 

Obsolete.     Superseded  by  Act  of  January  14th,  1875,  sec.  3,  page  94. 
See  Act  of  June  20th,  1874,  sec.  7,  page  87. 

59.  Withdrawing  Excess  of  Circulation. 
Section  5180. — The  Comptroller  of  the  Currency  shall,  under 
the  direction  of  the  Secretary  of  the  Treasury,  make  a  state- 
ment showing  the  amount  of  circulation  in  each  State  and 
Territory,  and  the  amount  necessary  to  be  withdrawn  from 
each  association,  and  shall  forthwith  make  a  requisition  for 
such  amount  upon  such  associations,  commencing  with  those 


35 

having  a  circulation  exceeding  one  million  of  dollars,  in  States 
having  an  excess  of  circulation,  and  withdrawing  their  circu- 
lation in  excess  of  one  million  of  dollars,  and  then  proceeding 
proportionately  with  other  associations  having  a  circulation 
exceeding  three  hundred  thousand  dollars,  in  States  having 
the  largest  excess  of  circulation,  and  reducing  the  circulation 
of  such  associations  in  States  having  the  greatest  proportion  in 
excess,  leaving  undisturbed  the  associations  in  States  having 
a  smaller  proportion,  until  those  in  greater  excess  have  been 
reduced  to  the  same  grade,  and  continuing  thus  to  make  such 
reductions  until  the  full  amount  of  twenty-five  millions  has 
been  withdrawn  ;  and  the  circulation  so  withdrawn  shall  be 
distributed  among  the  States  and  Territories  having  less  than 
their  proportion,  so  as  to  equalize  the  same.  Upon  failure  of 
any  association  to  return  the  amount  of  circulating  notes  so 
required,  within  one  year,  the  Comptroller  shall  sell  at  public 
auction,  having  given  twenty  days'  notice  thereof  in  one  daily 
newspaper  printed  in  Washington  and  one  in  New  York  city, 
an  amount  of  the  bonds  deposited  by  that  association  as  se- 
curity for  its  circulation,  equal  to  the  circulation  required  to 
be  withdrawn  from  the  association  and  not  returned  in  com- 
pliance with  such  requisition  ;  and  he  shall,  with  the  proceeds, 
redeem  so  many  of  the  notes  of  such  association,  as  they  come 
into  the  Treasury,  as  will  equal  the  amount  required  and  not 
returned  ;  and  shall  pay  the  balance,  if  any,  to  the  association. 

Obsolete.     See  Act  of  January  14th.  1875,  sec.  3,  page  94. 
60.   Removal  of  Associations. 

Section  5181. — Any  association  located  in  any  State  having 
more  than  its  proportion  of  circulation  may  be  removed  to  any 
State  having  less  than  its  proportion  of  circulation,  under  such 
rules  and  regulations  as  the  Comptroller  of  the  Currency,  with 
the  approval  of  the  Secretary  of  the  Treasury,  shall  prescribe  : 
Provided,  That  the  amount  of  the  issue  of  said  banks  shall  not 
be  deducted  from  the  issue  of  fifty-four  millions  mentioned  in 
section  five  thousand  one  hundred  and  seventy-eight. 

Obsolete.     Changes  of  location  can  now  be  accomplished  only  by  Act  of  Congress. 
See  Act  of  January  i4th,  1673,  sec.  3,  page  94. 

61.    Circulating  Notes :  for  what  Receivable. 

Section  5182. — After  any  association  receiving  circulating 


36 

notes  under  this  Title  has  caused  its  promise  to  pay  such  notes 
on  demand  to  be  signed  by  the  president  or  vice-president  and 
cashier  thereof,  in  such  manner  as  to  make  them  obligatory 
promissory  notes,  payable  on  demand,  at  its  place  of  business, 
such  association  may  issue  and  circulate  the  same  as  money. 
And  the  same  shall  be  received  at  par  in  all  parts  of  the  United 
States  in  payment  of  taxes,  excises,  public  lands,  and  all  other 
dues  to  the  United  States,  except  duties  on  exports ;  and  also 
for  all  salaries  and  other  debts  and  demands  owing  by  the 
United  States  to  individuals,  corporations,  and  associations 
within  the  United  States,  except  interest  on  the  public  debt, 
and  in  redemption  of  the  National  currency. 

It  is  held  that  as  this  section  evidently  requires  the  signatures  of  two  persons  to 
these  notes,  the  separate  offices  of  vice-president  and  cashier  cannot  be  held  by  the 
same  person,  inasmuch  as  this  might  result  in  the  same  person  signing  the  notes 
in  two  places  and  under  two  official  designations.  This  is  understood  to  mean  the 
manual,  and  not  the  printed,  lithographed,  or  engraved  signature.  There  appears, 
however,  to  be  no  penalty  for  having  printed  signatures  rather  than  written  ones, 
as  the  Comptroller  has  in  some  of  his  reports  recommended  a  law  imposing  a  penalty. 
It  is  often  a  great  task  to  sign  these  notes  in  quantities,  and  perhaps  a  provision  of 
law  authorizing  the  printing  of  signatures,  under  certain  conditions,  upon  the  notes 
of  smaller  denominations,  might  have  a  tendency  to  cause  a  larger  circulation  of 
National  bank  notes. 

62.   Issue  of  Other  Notes  Prohibited. 
Section  5183. — No  National  banking  association  shall  issue 
post  notes  or  any  other  notes  to  circulate  as  money  than  such 
as  are  authorized  by  the  provisions  of  this  Title. 

In  the  Revision  of  the  United  States  Statutes  the  words  "  post  notes"  were  omitted, 
but  were  afterwards  put  back  by  the  Act  of  February  18th,  1875,  page  97.  As 
the  usual  definition  of  a  post  note  is  a  note  payable  at  some  future  specified  time, 
this  section  has  been  held  to  prevent  National  banks  from  borrowing  money  upon 
their  promissory  notes.  If,  however,  the  words  to  circulate  as  money  qualify  "post 
notes"  as  well  as  "any  other  notes,"  then  this  opinion  will  not  stand.  The  ques- 
tion of  borrowing  money  by  National  banks,  other  than  in  the  form  of  money  volun- 
tarily deposited  with  them,  is  one  which  has  been  much  discussed,  and  all  the  pros 
and  cons  cannot  be  entered  into  here.  It  has  hitherto  been  held  by  the  Comptroller's 
office  that  the  power  to  do  so  is  not  granted  to  National  banks.  The  money  so 
borrowed  is,  however,  collectible,  and  the  practice  is  largely  followed.  The  penalty, 
if  it  should  be  declared  in  a  suit  that  such  practice  were  ultra  vires,  would  doubtless 
be  forfeiture  of  charter.     Time  certificates  of  deposit  are  doubtless  post  notes. 

63.  Destroying  and  Replacing  Mutilated  Notes. 
Section  5184. — It  shall  be  the  duty  of  the  Comptroller  of 
the  Currency  to  receive  worn-out  or  mutilated  circulating  notes 


37 

issued  by  any  banking  association,  and  also,  on  due  proof  of 
the  destruction  of  any  such  circulating  notes,  to  deliver  in 
place  thereof  to  the  association  other  blank  circulating  notes 
to  an  equal  amount.  Such  worn-out  or  mutilated  notes,  after 
a  memorandum  has  been  entered  in  the  proper  books,  in  ac- 
cordance with  such  regulations  as  may  be  established  by  the 
Comptroller,  as  well  as  all  circulating  notes  which  shall  have 
been  paid  or  surrendered  to  be  canceled,  shall  be  burned*  to 
ashes  in  presence  of  four  persons,  one  to  be  appointed  by  the 
Secretary  of  the  Treasury,  one  by  the  Comptroller  of  the  Cur- 
rency, one  by  the  Treasurer  of  the  United  States,  and  one  by 
the  association,  under  such  regulations  as  the  Secretary  of  the 
Treasury  may  prescribe.  A  certificate  of  such  burning,  signed 
by  the  parties  so  appointed,  shall  be  made  in  the  books  of  the 
Comptroller,  and  a  duplicate  thereof  forwarded  to  the  asso- 
ciation whose  notes  are  thus  canceled. 

Merchants'  Bank  t>.  State  Bank.  10  Wall.,  604. 

This  section  provides  for  the  security  of  the  destruction  of  notes  of  banks  at  a. 
distance  from  their  principals.  The  checks  provided  appear  to  be  adequate.  The 
details  of  the  process  are  given  elsewhere  in  this  work.     (See  page  172.') 

64.  National  Gold  Banks. 
Section  5185. — Associations  may  be  organized  in  the  man- 
ner prescribed  by  this  Title  for  the  purpose  of  issuing  notes 
payable  in  gold ;  and  upon  the  deposit  of  any  United  States f 
bonds  bearing  interest  payable  in  gold  with  the  Treasurer  of 
the  United  States,  in  the  manner  prescribed  for  other  asso- 
ciations, it  shall  be  lawful  for  the  Comptroller  of  the  Currency 
to  issue  to  the  association  making  the  deposit  circulating  notes 
of  different  denominations,  but  none  of  them  of  less  than  five 
dollars,  and  not  exceeding  in  amount  eighty  per  centum  of  the 
par  value  of  the  bonds  deposited,  which  shall  express  the 
promise  of  the  association  to  pay  them,  upon  presentation  at 
the  office  at  which  they  are  issued,  in  gold  coin  of  the  United 
States,  and  shall  be  so  redeemable.  But  no  such  association 
shall  have  a  circulation  of  more  than  one  million  of  dollars.  X 

There  are  now  no  gold  banks  in  existence,  although  it  may  again  become  profit- 

*Modified  by  Art  of  June  23d,  1st  l .  page  94. 
fSee  Act  of  February  14th,  1880,  page  10G. 
jSee  Act  of  January  19th, 


38 

able  to  organize  them.  The  resumption  of  specie  payments  placed  all  National 
banks  on  a  gold  basis  and  the  special  gold  banks  at  a  disadvantage  in  the  issue  of 
circulation. 

65.  Reserve  Required  of  Gold  Banks. 
Section  5186. — Every  association  organized  under  the  pre- 
ceding section  shall  at  all  times  keep  on  hand  not  less  than 
twenty-five  per  centum  of  its  outstanding  circulation,  in  gold 
or  silver  coin  of  the  United  States  ;  and  shall  receive  at  par  in 
the  payment  of  debts  the  gold  notes  of  every  other  such  asso- 
ciation which  at  the  time  of  such  payment  is  redeeming  its 
circulating  notes  in  gold  coin  of  the  United  States,  and  shall 
be  subject  to  all  the  provisions  of  this  Title  :  Provided,  That, 
in  applying  the  same  to  associations  organized  for  issuing  gold 
notes,  the  terms  ' '  lawful  money ' '  and  ' '  lawful  money  of  the 
United  States  "  shall  be  construed  to  mean  gold  or  silver  coin 
of  the  United  States ;  and  the  circulation  of  such  association 
shall  not  be  within  the  limitation  of  circulation  mentioned  in 
this  Title.* 

See  previous  section  and  remarks. 

66.  Penalty  for  Imitating  National  Bank  Notes,  &c. 
Section  5188. — It  shall  not  be  lawful  to  design,  engrave, 
print,  or  in  any  manner  make  or  execute,  or  to  utter,  issue, 
distribute,  circulate,  or  use,  any  business  or  professional  card, 
notice,  placard,  circular,  hand-bill,  or  advertisement,  in  the 
likeness  or  similitude  of  any  circulating  note  or  other  obliga- 
tion or  security  of  any  banking  association  organized  or  acting 
under  the  laws  of  the  United  States  which  has  been  or  may  be 
issued  under  this  Title,  or  any  Act  of  Congress,  or  to  write, 
print,  or  otherwise  impress  upon  any  such  note,  obligation,  or 
security  any  business  or  professional  card,  notice  or  advertise- 
ment, or  any  notice  or  advertisement  of  any  matter  or  thing 
whatever.  Every  person  who  violates  this  section  shall  be 
liable  to  a  penalty  of  one  hundred  dollars,  recoverable  one- 
half  to  the  use  of  the  informer. 

This  section  is  to  prevent  the  deluding  of  igmorant  and  unwary  people,  and  to 
avoid  bringing  the  National  system  into  discredit  even  collaterally. 

67.    Penalty  for  Mutilating  Notes.  &c. 
Section  5189. — Every  person  who  mutilates,  cuts,  defaces, 

*Section  5187,  page  76. 


39 

disfigures,  or  perforates  with  holes,  or  unites  or  cements  to- 
gether, or  does  any  other  thing  to  any  bank-bill,  draft,  note, 
or  other  evidence  of  debt,  issued  by  any  National  banking  as- 
sociation, or  who  causes  or  procures  the  same  to  be  done,  with 
intent  to  render  such  bank-bill,  draft,  note,  or  other  evidence 
of  debt  unfit  to  be  reissued  by  said  association,  shall  be  liable 
to  a  penalty  of  fifty  dollars,  recoverable  by  the  association. 

This  is  to  prevent  malicious  mischief. 

REGULATION   OP   THE   BANKING   BUSINESS. 
68.    Place  of  Business. 
Section  5190. — The  usual  business  of  each  National  bank- 
ing association  shall  be  transacted  at  an  office  or  banking-house 
located  in  the  place  specified  in  its  organization  certificate. 

Merchants'  Bank  v.  State  Bank,  10  Wall.,  G04. 

The  usual  business  is  the  business  which  is  usually  done  in  the  bank  office  itself. 
Some  Xational  banks  have  opened  offices  at  places  other  than  those  named  in  their 
organization  certificates  for  receiving  deposits.  It  is  understood  that  no  checks  are 
paid  or  loans  made ;  and  it  is  doubtful  whether  under  this  section  a  Xational  bank 
has  a  right  to  receive  deposits  even  at  any  place  other  than  its  banking-house  in  the 
place  named  in  its  organization  certificate. 

69.  Requirements  as  to  Lawful  Money  Reserve. 
Section  5191. — Ever}-  National  banking  association  in 
either  of  the  following  cities :  Albany,  Baltimore,  Boston, 
Cincinnati,  Chicago,  Cleveland,  Detroit,  Louisville,  Milwau- 
kee, New  Orleans,  New  York,  Philadelphia,  Pittsburg,  Saint 
Louis,  San  Francisco,  and  Washington,  shall  at  all  times  have 
on  hand,  in  lawful  money  of  the  United  States,  an  amount 
equal  to  at  least  twenty-five  per  centum  of  the  aggregate  amount 
of  its  notes  in  circulation  and  its  deposits  ;  and  even*  other  asso- 
ciation shall  at  all  times  have  on  hand,  in  lawful  money  of  the 
United  States,  an  amount  equal  to  at  least  fifteen  per  centum 
of  the  aggregate  amount  of  its  notes  in  circulation,  and  of  its 
deposits.  Whenever  the  lawful  money  of  any  association  in 
any  of  the  cities  named  shall  be  below  the  amount  of  twenty- 
five  per  centum  of  its  circulation  and  deposits,  and  whenever 
the  lawful  money  of  any  other  association  shall  be  below  fifteen 
per  centum  of  its  circulation  and  deposits,  such  association 
shall  not  increase  its  liabilities  by  making  any  new  loans  or 
discounts  otherwise  than  by  discounting  or  purchasing  bills  of 

♦See  Act  March  3,  1887.  page   1150. 


40 

exchange  payable  at  sight,  nor  make  any  dividend  of  its  profits 
until  the  required  proportion,  between  the  aggregate  amount 
of  its  outstanding  notes  of  circulation  and  deposits  and  its  law- 
ful money  of  the  United  States,  has  been  restored.  And  the 
Comptroller  of  the  Currency  may  notify  any  association,  whose 
lawful-money  reserve  shall  be  below  the  amount  above  required 
to  be  kept  on  hand,  to  make  good  such  reserve  ;  and  if  such 
association  shall  fail-  for  thirty  days  thereafter  so  to  make  good 
its  reserve  of  lawful  money,  the  Comptroller  may,  with  the 
concurrence  of  the  Secretary  of  the  Treasury,  appoint  a  receiver 
to  wind  up  the  business  of  the  association,  as  provided  in  sec- 
tion fifty-two  hundred  and  thirty-four. 

See  Act  of  July  12th,  1882,  Section  12,  page  76. 

Section  2  of  the  Act  of  June  20th.  1874,  page  87,  relieves  National  banks  of  the 
necessity  of  keeping  reserve  upon  circulation.  The  method  of  calculating  reserve, 
and  the  funds  available  therefor,  are  fully  treated  of  elsewhere  in  this  work,  (see 
page  137.) 

70.  Redemption  Cities  and  Reserve  Required.  * 
Section  5192. — Three-fifths  of  the  reserve  of  fifteen  per 
centum  required  by  the  preceding  section  to  be  kept,  may  con- 
sist of  balances  due  to  an  association,  available  for  the  re- 
demption of  its  circulating  notes,  from  associations  approved 
by  the  Comptroller  of  the  Currency,  organized  under  the  Act 
of  June  three,  eighteen  hundred  and  sixty-four,  or  under  this 
Title,  and  doing  business  in  the  cities  of  Albany,  Baltimore, 
Boston,  Charleston,  Chicago,  Cincinnati,  Cleveland,  Detroit, 
Louisville,  Milwaukee,  New  Orleans,  New  York,  Philadelphia, 
Pittsburg,  Richmond,  Saint  Louis,  San  Francisco,  and  Wash- 
ington. Clearing-house  certificates,  representing  specie  or  law- 
ful money  specially  deposited  for  the  purpose,  of  any  clearing- 
house association,  shall  also  be  deemed  to  be  lawful  money  in 
the  possession  of  any  association  belonging  to  such  clearing- 
house, holding  and  owning  such  certificate,  within  the  pre- 
ceding section. 

See  Act  of  June  20th,  1874,  Section  3,  page  87. 

For  explanation  of  lawful-money  reserve,  see  page  137. 

71.    United  States  Certificates  of  Deposit  as  Reserve. 
Section  5193. — The  Secretary  of  the  Treasury  may  receive 
United  States  notes  on  deposit,  without  interest,   from  any 

♦See  Act  March  3,  1887,  page  115  C. 


4i 

National  banking  associations,  in  sums  of  not  less  than  ten 
thousand  dollars,  and  issue  certificates  therefor  in  such  form 
as  he  may  prescribe,  in  denominations  of  not  less  than  five 
thousand  dollars,  and  payable  on  demand  in  United  States 
notes  at  the  place  where  the  deposits  were  made.  The  notes 
so  deposited  shall  not  be  counted  as  part  of  the  lawful-money 
reserve  of  the  association ;  but  the  certificates  issued  therefor 
may  be  counted  as  part  of  its  lawful-money  reserve,  and  may 
be  accepted  in  the  settlement  of  clearing-house  balances  at  the 
places  where  the  deposits  therefor  were  made. 

72.  Issue  of  Certificates  of  Deposit. 
Section  5194. — The  power  conferred  on  the  Secretary  of 
the  Treasury,  by  the  preceding  section,  shall  not  be  exercised 
so  as  to  create  any  expansion  or  contraction  of  the  currencv. 
And  United  States  notes  for  which  certificates  are  issued  under 
that  section,  or  other  United  States  notes  of  like  amount,  shall 
be  held  as  special  deposits  in  the  Treasury,  and  used  only  for 
redemption  of  such  certificates. 

73.  Redemption  of  Circulating  Notes. 
Section  5195. — Each  association  organized  in  any  of  the 
cities  named  in  section  fifty-one  hundred  and  ninety-one  shall 
select,  subject  to  the  approval  of  the  Comptroller  of  the  Cur- 
rency, an  association  in  the  city  of  New  York,  at  which  it  will 
redeem  its  circulating  notes  at  par;  and  may  keep  one-half  of 
its  lawful-money  reserve  in  cash  deposits  in  the  city  of  New 
York.  But  the  foregoing  provision  shall  not  apply  to  asso- 
ciations organized  and  located  in  the  city  of  San  Francisco  for 
the  purpose  of  issuing  notes  payable  in  gold.  Each  association 
not  organized  within  the  cities  named  shall  select,  subject  to 
the  approval  of  the  Comptroller,  an  association  in  either  of  the 
cities  named,  at  which  it  will  redeem  its  circulating  notes  at 
par.  The  Comptroller  shall  give  public  notice  of  the  names 
of  the  associations  selected,  at  which  redemptions  are  to  be 
made  by  the  respective  associations,  and  of  any  change  that 
may  be  made  of  the  association  at  which  the  notes  of  any  asso- 
ciation are  redeemed.  Whenever  any  association  fails  either 
to  make  the  selection  or  to  redeem  its  notes  as  aforesaid,  the 
Comptroller  of  the  Currency  may,  upon  receiving  satisfactory 


42 

evidence  thereof,  appoint  a  receiver  in  the  manner  provided 
for  in  section  fifty-two  hundred  and  thirty-four,  to  wind  up  its 
affairs.  But  this  section  shall  not  relieve  any  association  from 
its  liability  to  redeem  its  circulating  notes  at  its  own  counter, 
at  par,  in  lawful  money  on  demand. 

The  provisions  of  this  section  having  reference  to  the  redemption  of  circulating 
notes  and  the  selection  of  an  association  at  which  it  will  redeem  its  circulating  notes 
at  par,  have  been  superseded  by  the  provisions  of  Section  3  of  the  Act  of  June  20th, 
1874.  As  the  provisions  for  the  redemption  of  notes  in  New  York  or  other  cities 
did  not  relieve  a  National  bank  from  the  necessity  of  redeeming  its  circulating  notes 
in  lawful  money  at  its  own  counter,  so  it  is  held  that  the  present  system  of  redeem- 
ing circulating  notes  at  the  United  States  Treasury  does  not  relieve  National  banks 
of  the  necessity  of  redeeming  their  notes  at  their  own  counter.  This  section  gives 
banks  in  certain  cities  permission  to  keep  one-half  of  their  lawful  money  reserve  in 
cash  deposits  in  New  York.  It  was  the  custom  under  this  section  to  select  certain 
associations  in  New  York  or  other  cities  as  redemption  agencies,  and  obtain  the  ap- 
proval of  the  Comptroller  ;  and  it  seems  to  have  been  generally  acceded  to  that 
these  approved  redemption  agencies  were  the  only  banks  in  New  York  or  other  re- 
serve cities  where  the  reserves  of  National  banks  could  be  kept.  When  the  law 
requiring  these  redemption  agencies  was  repealed,  the  Comptroller's  office  still  con- 
tinued to  require  banks  in  the  cities  named  to  select  particular  banks  in  New  York 
city  at  which  it  was  the  intention  to  keep  their  reserves.  This  action  is,  as  far  as 
banks  outside  the  reserve  cities  are  concerned,  sustained  by  the  language  of  Section 
5192;  but  perhaps  the  portion  of  Section  5195,  now  in  force,  referring  to  banks  in 
other  reserve  cities  keeping  their  reserves  in  New  York,  may  be  construed  to  allow 
any  cash  deposits  held  in  New  York  city  to  be  counted  as  lawful  reserve. 

74.  National  Bank  Notes  a  Legal  Tender. 
Section  5196. — Every  National  banking  association  formed 
or  existing  under  this  Title  shall  take  and  receive  at  par,  for 
any  debt  or  liability  to  it,  any  and  all  notes  or  bills  issued  by 
any  lawfully  organized  National  banking  association.  But 
this  provision  shall  not  apply  to  any  association  organized  for 
the  purpose  of  issuing  notes  payable  in  gold. 

This  section  makes  National  bank  notes  legal  tender  to  any  National  bank.  Na- 
tional bank  notes  are  redeemable  in  lawful  money,  that  is,  in  gold,  silver  dollars  or 
legal-tender  notes ;  and  it  will  readily  be  seen  that  any  depreciation  of  the  character 
of  lawful  money — as,  for  instance,  the  substitution  of  an  inferior  dollar  for  our  present 
standard — is  of  the  utmost  importance  to  National  banks,  as  there  are  no  gold  banks 
now  in  existence.     The  last  clause  of  this  section  has,  at  present,  no  importance. 

75.    Rate  of  Interest  Limited. 
Section  5197. — Any  association  may  take,  receive,  reserve, 
and  charge  on  any  loan  or  discount  made,  or  upon  any  note, 
bill  of  exchange,  or  other  evidences  of  debt,  interest  at  the 


43 

rate  allowed  by  the  laws  of  the  State,  Territory,  or  district 
where  the  bank  is  located,  and  no  more,  except  that  where  by 
the  laws  of  any  State  a  different  rate  is  limited  for  banks  of 
issue  organized  under  State  laws,  the  rate  so  limited  shall  be 
allowed  for  associations  organized  or  existing  in  any  such 
State  under  this  Title.  When  no  rate  is  fixed  by  the  laws  of 
the  State,  or  Territory,  or  district,  the  bank  may  take,  receive, 
reserve,  or  charge  a  rate  not  exceeding  seven  per  centum,  and 
such  interest  may  be  taken  in  advance,  reckoning  the  days 
from  which  the  note,  bill,  or  other  evidence  of  debt  has  to  run. 
And  the  purchase,  discount,  or  sale  of  a  bona  fide  bill  of  ex- 
change, payable  at  another  place  than  the  place  of  such  pur- 
chase, discount,  or  sale,  at  not  more  than  the  current  rate  of 
exchange  for  sight-drafts  in  addition  to  the  interest,  shall  not 
be  considered  as  taking  or  receiving  a  greater  rate  of  interest. 

In  Tiffany  r.  National  Bank  of  the  State  of  Missouri,  18  Wall.,  p.  409,  it  was  held 
that  where  the  rate  allowed  by  State  law  to  be  taken  by  State  banks  was  less  than 
that  allowed  to  be  taken  by  natural  persons,  National  banks  were  not  by  this  sec- 
tion restricted  to  the  less  rate.  This  decision  was  on  the  ground  that  the  intention 
of  Congress  was  to  place  National  banks  on  an  equality  with  State  institutions  of  the 
same  kind,  but  not  to  restrict  National  banks  if  a  State  may  choose  to  discriminate 
in  favor  of  its  own  institutions.  In  other  words,  if  State  banks  are  permitted  by 
State  law  to  take  more  than  the  common  rate  of  interest,  National  banks  could  do 
the  same  ;  but  if  State  banks  are  restricted  to  less  than  the  common  rate,  this  section 
does  not  imply  that  National  banks  must  be  restricted  to  less  than  the  common  rate. 
See  remarks  on  next  section. 

76.  Penalty  for  Taking  Usurious  Interest. 
Section  5198. — The  taking,  receiving,  reserving,  or  charg- 
ing a  rate  of  interest  greater  than  is  allowed  by  the  preceding 
section,  when  knowingly  done,  shall  be  deemed  a  forfeiture  of 
the  entire  interest  which  the  note,  bill,  or  other  evidence  of 
debt  carries  with  it,  or  which  has  been  agreed  to  be  paid  there- 
on. In  case  the  greater  rate  of  interest  has  been  paid,  the 
person  by  whom  it  has  been  paid,  or  his  legal  representatives, 
may  recover  back,  in  an  action  in  the  nature  of  an  action  of 
debt,  twice  the  amount  of  the  interest  thus  paid  from  the  asso- 
ciation taking  or  receiving  the  same;  provided  such  action  is 
commenced  within  two  years  from  the  time  the  usurious  trans- 
action occurred. 

Many  persons  write  to  the  Department  at  Washington  complaining  that  National 
banks  have  charged  more  than  lawful  rates  of  interest,  in  contravention  of  this  and 


44 

the  preceding  section.  Section  5198  contains  the  only  penalty,  and  this  penalty  can 
only  be  enforced  by  the  aggrieved  party  or  his  representatives.  The  following  are 
the  results  of  the  most  important  decisions  of  the  courts :  State  laws  relative  to 
usury  do  not  apply  to  National  banks.  No  part  of  the  principal  is  forfeited  by 
charging  usurious  interest.  The  entire  interest  agreed  upon  is,  however,  forfeited, 
and  cannot  be  recovered  by  the  bank.  If,  however,  the  usurious  interest  has  been 
actually  paid,  twice  the  sum  may  be  recovered  by  the  borrower,  in  a  suit  brought 
especially  for  the  purpose  within  two  years  from  the  date  of  the  usurious  transaction. 
(Burnett  v.  National  Bank,  98  U.  S.,  p.  555  ;  Mechanics'  National  Bank  v.  Dearing, 
1  Otto,  p.  29.)  There  can  be  no  forfeiture  of  charter  for  an  act  the  penalty  for  which 
and  the  method  of  enforcing  such  penalty  are  so  clearly  set  forth. 

77.  Dividends  and  Surplus  Fund. 
Section  5199. — The  directors  of  any  association  may,  semi- 
annually, declare  a  dividend  of  so  much  of  the  net  profits  of 
the  association  as  they  shall  judge  expedient;  but  each  asso- 
ciation shall,  before  the  declaration  of  a  dividend,  carry  one- 
tenth  part  of  its  net  profits  of  the  preceding  half  year  to  its 
surplus  fund  until  the  same  shall  amount  to  twenty  per  centum 
of  its  capital  stock. 

This  section  is  permissive,  and  it  is  doubtful  if  under  it  any  other  than  semi- 
annual dividends  are  strictly  legal.  Some  National  banks  do,  however,  declare  quar- 
terly dividends,  and  a  few  declare  dividends  monthly.  The  section  also  provides 
for  the  accumulation  of  a  surplus  fund,  up  to  a  certain  limit.  For  net  profits,  see 
Section  5204,  par.  82.  The  sections  intervening  between  Sections  5199  and  5204 
contain  provisions  which,  if  strictly  observed,  insure  the  sound  condition  of  the 
bank  and  prevent  the  payment  of  unearned  dividends,  or  the  payment  of  dividends 
when  the  bank's  business  is  too  extended  and  the  value  of  its  assets  in  doubt. 

78.  Liabilities  of  any  Person,  &c.,  to  Bank. 
Section  5200. — The  total  liabilities  to  any  association  of  any 
person,  or  of  any  company,  corporation,  or  firm,  for  money 
borrowed,  including  in  the  liabilities  of  a  company  or  firm  the 
liabilities  of  the  several  members  thereof,  shall  at  no  time  ex- 
ceed one-tenth  part  of  the  amount  of  the  capital  stock  of  such 
association  actually  paid  in.  But  the  discount  of  bills  of  ex- 
change drawn  in  good  faith  against  actually  existing  values, 
and  the  discount  of  commercial  or  business  paper  actually 
owned  by  the  person  negotiating  the  same,  shall  not  be  con- 
sidered as  money  borrowed. 

The  evident  intention  of  this  section  is  to  insure  a  proper  distribution  of  loans. 
In  practice  it  is  found  extremely  difficult  to  avoid  infringing  its  letter,  as  there  are 
doubtless  many  loans  perfectly  safe  which  banks  are  by  it  prevented  from  taking. 
It  covers  all  collateral  loans  as  well  as  others.  The  only  exceptions  are  those  named 
in  the  last  sentence  of  the  section.     A  loan  on  collateral  of  Government  bonds  in 


45 

excess  of  the  limit  would  be  in  violation  of  the  letter  of  the  law.  There  is  no  spe- 
cific penalty  for  violation  prescribed  in  the  section  itself.  The  only  penalty  is  the 
form  of  proceeding  prescribed  in  Section  5239  for  forfeiture  of  charter.  The  Comp- 
troller lias  heretofore  hesitated  to  enforce  this  extreme  measure  against  banks  guilty, 
perhaps,  of  a  violation  of  the  letter  more  than  the  spirit.  Thus  the  main  reason 
tor  a  distribution  of  loans  is  safety,  and  as  safety  is  not  jeopardized  by  a  loan  on  se- 
cure collateral,  such  a  loan  even  in  excess  of  the  limit  does  not,  perhaps,  violate 
the  spirit  of  the  section. 

Deposits  with  correspondents  other  than  National  banks  cannot,  under  a  ruling 
of  the  Comptroller's  office  sustained  by  an  opinion  of  the  Solicitor  of  the  Treasury, 
exceed  this  limit.  There  are  some  nice  questions  which  arise  from  the  cumulation 
of  liability  under  the  provision  that  the  liabilities  of  the  several  members  of  firms, 
&c,  shall  form  a  part  of  the  total  liabilities  of  the  firm.  Thus  a  man  may  be  a. 
member  of  more  than  one  firm,  all  being  customers  of  the  bank.  The  details  of 
these  ramifications  cannot  be  gone  into  here.  Each  case  would  call  for  a  specific 
inquiry. 

79.  Associations  not  to  Loan  upon  their  own  Stock.- 
Section  5201. — No  association  shall  make  any  loan  or  dis- 
count on  the  security  of  the  shares  of  its  own  capital  stock, 
nor  be  the  purchaser  or  holder  of  any  such  shares,  unless  such 
security  or  purchase  shall  be  necessary  to  prevent  loss  upon  a 
debt  previously  contracted  in  good  faith;  and  stock  so  pur- 
chased or  acquired  shall,  within  six  months  from  the  time  of 
its  purchase,  be  sold  or  disposed  of  at  public  or  private  sale,  or, 
in  default  thereof,  a  receiver  may  be  appointed  to  close  up  the 
business  of  the  association,  according  to  section  fifty-two  hun- 
dred and  thirty-four. 

Bank  v.  Lanier,  11  Wall..  369;  Ballard  v.  Bank,  18  Wall.,  589. 

The  reasons  for  the  provisions  of  this  section  lie  at  the  very  root  of  joint-stock 
banking.  If  associations  had  full  power  to  deal  in  their  own  stock,  their  immedi- 
ate managers  would  often  be  under  great  temptation  to  manipulate  the  affairs  of  the 
bank  for  their  own  aggrandizement.  As  against  the  main  body  of  stockholders,  the 
directors  and  officers  have  the  advantage  of  being  a  small,  compact,  well-disciplined 
body  within  the  fortress,  against  what,  to  carry  out  the  figure,  may  be  termed  a 
mob  without  leaders  and  often  divided  among  themselves.  The  directors  might  de- 
preciate the  stock  by  passing  dividends,  &c,  and  then,  bidding  it  in,  cancel  it,  thus 
in  time  absorbing  the  whole  bank.  The  provision  that  a  bank  must  not  take  its 
own  stock,  except  under  certain  circumstances,  and  when  it  so  takes  it  must  sell, 
not  cancel,  prevents  this  abuse,  although  thert;  are  doubtless  other  ways  in  which 
the  same  object  is  reached  by  unscrupulous  managers. 

80.    Limit  of  Indebtedness  of  Association. 
Section  5202. — No  association  shall  at  any  time  be  indebted, 
or  in  any  way  liable,  to  an  amount  exceeding  the  amount  of 
its  capital   stock  at  such  time  actually  paid  in  and   remaining 


46 

undiminished  by  losses  or  otherwise,  except  on  account  of  de- 
mands of  the  nature  following: 

First.  Notes  of  circulation. 

Second.  Moneys  deposited  with  or  collected  by  the  associa- 
tion. 

Third.  Bills  of  exchange  or  drafts  drawn  against  money  act- 
ually on  deposit  to  the  credit  of  the  association  or  due  thereto. 

Fourth.  Liabilities  to  the  stockholders  of  the  association  for 
dividends  and  reserve  profits. 

The  exceptions  in  this  section  are  wide,  and  allow  ample  room  for  all  legitimate 
business.  It  virtually  says  to  a  National  bank  that  if  it  wishes  to  take  liabilities 
other  than  those  named  in  the  section,  it  must  meet  them  from  its  own  capital  and 
not  from  money  intrusted  to  it  either  by  its  own  stockholders  (surplus  and  undi- 
vided profits  and  unpaid  dividends)  or  the  outside  public.  A  lender  to  a  National 
bank  would  apparently,  under  this  section,  have  no  redress  or  power  of  recovery 
except  against  its  unimpaired  capital.  It  is  doubtful  whether  the  liability  of  stock- 
holders could  be  enforced  to  pay  such  a  debt. 

81.  Circulating  Notes  not  to  be  Hypothecated. 
Section  5203. — No  association  shall,  either  directly  or  in- 
directly, pledge  or  hypothecate  any  of  its  notes  of  circulation 
for  the  purpose  of  procuring  money  to  be  paid  in  on  its  capital 
stock,  or  to  be  used  in  its  banking  operations  or  otherwise;  nor 
shall  any  association  use  its  circulating  notes,  or  any  part  there- 
of, in  any  manner  or  form  to  create  or  increase  its  capital  stock. 

Notes  of  circulation  are  to  be  issued  by  the  bank  in  ordinary  course  of  business. 
This  section  is  intended  to  prevent  the  organization  of  more  than  one  National  bank 
with  the  same  capital.  Thus  it  was  feared  that  unscrupulous  persons  with  a  small 
capital,  say  sufficient  to  purchase  the  minimum  of  bonds  required  by  law,  might 
start  an  alleged  bank,  and  by  dishonestly  certifying  the  capital  paid  up,  secure  cir- 
culation which  they  could  use  in  procuring  additional  payments  of  capital  or  money 
in  bank.  If  the  notes  alone  were  in  the  bank,  the  suspicions  of  the  examiner  might 
be  excited  ;  but  by  changing  them  for  other  money,  and  with  dummy  paper  to  fill 
up,  a  bank  with  very  little  real  capital  could  make  a  good  showing  on  its  books. 
This  section  becomes  especially  important,  since  the  reduction  of  the  minimum  de- 
posit of  United  States  bonds  to  one  quarter  of  capital,  in  case  of  banks  with  a  cap- 
ital of  $150,000  or  less. 

82.  Withdrawal  of  Capital ;  Dividends ;  Bad  Debts. 
Section  5204. — No  association,  or  any  member  thereof, 
shall,  during  the  time  it  shall  continue  its  banking  operations, 
withdraw,  or  permit  to  be  withdrawn,  either  in  the  form  of 
dividends  or  otherwise,  any  portion  of  its  capital.  If  losses 
have  at  any  time  been  sustained  by  any  such  association,  equal 


47 

to  or  exceeding  its  undivided  profits  then  on  hand,  no  dividend 
shall  be  made ;  and  no  dividend  shall  ever  be  made  by  any  as- 
sociation, while  it  continues  its  banking  operations,  to  an 
amount  greater  than  its  net  profits  then  on  hand,  deducting 
therefrom  its  losses  and  bad  debts.  All  debts  due  to  any  asso- 
ciations, on  which  interest  is  past  due  and  unpaid  for  a  period 
of  six  months,  unless  the  same  are  well  secured  and  in  process 
of  collection,  shall  be  considered  bad  debts  within  the  meaning 
of  this  section.  But  nothing  in  this  section  shall  prevent  the 
reduction  of  the  capital  stock  of  the  association  under  section 
fifty-one  hundred  and  forty-three. 

This  section  is  intended  to  guard  against  any  impairment  of  the  paid-in  capital, 
especially  against  that  insidious  form  of  impairment  so  dangerous  to  stockholders — 
its  withdrawal  in  the  shape  of  dividends. 

It  has  been  contended  that  the  undivided  profits  mentioned  in  the  second  sen- 
tence are  undivided  profits  exclusive  of  legal  surplus,  which,  if  Section  5199  is 
strictly  adhered  to,  should  at  all  times  equal  one-tenth  of  the  total  net  profits  of 
the  bank  until  such  one-tenth  exceeds  one-fifth  of  the  capital,  and  it  is  the  rule  of 
the  Comptroller's  office  that  the  legal  surplus  must  never  be  used  to  pay  dividends, 
although  it  can,  of  course,  be  used  to  meet  losses  that  undivided  profits  other  than 
legal  surplus  are  insufficient  to  meet.  Net  profits,  both  in  this  section  and  in  Sec- 
tion 5199,  seem  to  mean  profits  other  than  legal  surplus  which  remain  at  the  end  of 
each  six  months  after  deducting  all  expenses,  losses,  and  bad  debts.  The  definition 
of  bad  debts  is  as  plain  as  can  be  made  of  a  thing  so  difficult  to  define.  There  is 
one  positive  sign,  viz.,  interest  past  due  and  unpaid  for  six  months,  and  two  quali- 
fications, that  is,  even  if  interest  is  due  and  unpaid  six  months,  they  are  still  not 
bad  debts  if,  1st,  they  are  well  secured,  and,  2d,  also  in  process  of  collection.  The 
indefiniteness  of  this  definition  consists  in  the  difference  of  opinion  which  may 
arise  as  to  security. 

83.  Enforcing  Payment  of  Capital  Stock. 
Section  5205. — Every  association  which  shall  have  failed  to 
pay  up  its  capital  stock,  as  required  by  law,  and  every  asso- 
ciation whose  capital  stock  shall  have  become  impaired  by 
losses  or  otherwise,  shall,  within  three  months  after  receiving 
notice  thereof  from  the  Comptroller  of  the  Currency,  pay  the 
deficiency  in  the  capital  stock,  by  assessment  upon  the  share- 
holders pro  rata  for  the  amount  of  capital  stock  held  by  each  ; 
and  the  Treasurer  of  the  United  States  shall  withhold  the  in- 
terest upon  all  bonds  held  by  him  in  trust  for  any  such  associa- 
tion upon  notification  from  the  Comptroller  of  the  Currency, 
until  otherwise  notified  by  him.  If  any  such  association  shall 
fail  to  pay  up  its  capital  stock,   and  shall  refuse  to  go  into 


48 

liquidation,  as  provided  by  law,  for  three  months  after  receiv- 
ing notice  from  the  Comptroller,  a  receiver  may  be  appointed 
to  close  up  the  business  of  the  association,  according  to  the 
provisions  of  section  fifty-two  hundred  and  thirty-four. 

Under  this  section  the  Comptroller  takes  the  initiatory  step  in  the  proceedings 
to  restore  an  impaired  or  unpaid  capital  stock.  He  discovers  this  condition  of 
affairs  either  through  reports  made  to  his  office  by  the  banks,  or  from  reports  made 
to  him  by  examiners.  After  the  notice  is  issued  the  matter  of  making  the  assess- 
ment is  in  the  hands  of  the  directors,  whose  duty  it  is  to  call  upon  the  stockholders. 
The  Comptroller  may  notify  the  Treasurer  to  withhold  interest  on  the  bonds  of  the 
association  with  the  impaired  capital.  Section  4  of  the  Act  of  June  30th,  1876,  page 
104.  provides  how  directors  may  enforce  payment  of  assessment  made  upon  the  stock- 
holders under  Section  5205.  As  this  section  gives  three  months,  and  Section  4  of 
the  Act  of  June  30th,  1876,  grants  thirty  days  longer  for  notice  of  sale  of  stock,  the 
whole  process,  it  seems,  takes  four  months.  The  Comptroller  may,  however,  in  his 
discretion,  appoint  a  receiver  after  three  months.  This,  it  would  seem,  makes  it  a 
matter  of  judgment  for  the  directors  or  others  most  interested  in  the  bank  either  to 
make  good  the  impaired  stock  of  the  delinquent  stockholders  and  trust  to  the  sale  to 
reimburse  themselves,  or  to  let  the  bank  go  into  a  receiver's  hands  at  the  end  of  three 
months,  if  the  Comptroller  should  insist  on  their  appointing  a  receiver. 

84.  Associations  not  to  pay  out  Uncurrent  Notes. 
Section  5206. — No  association  shall  at  any  time  pay  out  on 
loans  or  discounts,  or  in  purchasing  drafts  or  bills  of  exchange, 
or  in  payment  of  deposits,  or  in  any  other  mode  pay  or  put'  in 
circulation  the  notes  of  any  bank  or  banking  association  which 
are  not,  at  any  such  time,  receivable,  at  par,  on  deposit,  and 
in  payment  of  debts  by  the  association  so  paying  out  or  circu- 
lating such  notes;  nor  shall  any  association  knowingly  pay  out 
or  put  in  circulation  any  notes  issued  by  any  bank  or  banking 
association  which  at  the  time  of  such  paying  out  or  putting  in 
circulation  is  not  redeeming  its  circulating  notes  in  lawful 
money  of  the  United  States. 

This  section  was  inserted  in  the  law  at  a  time  when  there  was  still  a  large 
amount  of  State  bank  notes  in  circulation,  and  it  had  reference  to  these  State  bank 
notes  as  well  as  to  the  notes  of  National  banking  associations.  The  refusal  on  the 
part  of  a  National  bank  to-day  to  redeem  its  notes,  either  at  the  Treasury  or  its  own 
counter,  would  render  it  liable  to  have  its  notes  refused  and  thrown  out  by  every 
National  bank  in  the  United  States. 

85.    Penalty  for  Falsely  Certifying  Checks. 

Section  5208. — It  shall  be  unlawful  for  any  officer,  clerk, 

or  agent  of  any  National  banking  association  to  certify  any 

check  drawn  upon  the  association  unless  the  person  or  com- 


49 

pany  drawing  the  check  has  on  deposit  with  the  association, 
at  the  time  such  check  is  certified,  an  amount  of  money  equal 
to  the  amount  specified  in  such  check.  Any  check  so  certified 
by  duly  authorized  officers  shall  be  a  good  and  valid  obligation 
against  the  association;  but  the  act  of  any  officer,  clerk,  or 
agent  of  any  association,  in  violation  of  this  section,  shall  sub- 
ject such  bank  to  the  liabilities  and  proceedings  on  the  part 
of  the  Comptroller  as  provided  for  in  section  fifty-two  hundred 
and  thirty-four. 

Section  5209,  page  TT. 

Legal  certification  of  a  check  has  been  defined  by  the  TJ.  S.  Supreme  Court  to  be 
a  form  of  acceptance  which,  from  its  nature,  implies  that  the  reason  of  the  accept- 
ance is  the  fact  that  the  drawer  of  the  check  has  a  credit  in  the  accepting  bank 
sufficient  to  meet  the  check,  and  that  sufficient  of  that  credit  to  meet  such  certified 
check  will  be  set  apart  and  especially  held  to  meet  it.  An  illegal  certification  is 
one  where  the  bank,  for  any  space  of  time,  however  short,  assumes  a  liability  by 
certifying  a  check  to  be  good  when  the  drawer  has  no  bona  fide  credit  on  its  books. 
The  bank  is  equally  bound  by  a  legal  or  illegal  certification  ;  but  if  the  certification 
be  illegally  made  the  bank  is  liable  to  be  placed  in  the  hands  of  a  receiver,  and  its 
officers  who  certify  the  check  are  liable  to  criminal  prosecution  under  Section  13 
of  the  Act  of  July  12th,  1882.  It  was  alleged  that  it  had  become  a  practice  for 
banks  in  the  large  cities  to  aid  speculative  dealers  by  certifying  their  checks,  trusting 
that  their  accounts  would  be  made  good  ere  the  check  could  come  from  the  Clearing 
House;  and  this  allegation  was  the  basis  of  the  action  of  Congress  in  enacting  Sec- 
tion 13  of  the  Act  of  July  12th,  1882. 

86.  List  of  Shareholders. 
Section  5210. — The  president  and  cashier  of  every  National 
banking  association  shall  cause  to  be  kept  at  all  times  a  full 
and  correct  list  of  the  names  and  residences  of  all  the  share- 
holders in  the  association,  and  the  number  of  shares  held  br- 
each, in  the  office  where  its  business  is  transacted.  Such  list 
shall  be  subject  to  the  inspection  of  all  the  shareholders  and 
creditors  of  the  association,  and  the  officers  authorized  to  assess 
taxes  under  State  authority,  during  business  hours  of  each  day 
in  which  business  may  be  legally  transacted.  A  copy  of  such 
list,  on  the  first  Monday  of  July  of  each  year,  verified  by  the 
oath  of  such  president  or  cashier,  shall  be  transmitted  to  the 
Comptroller  of  the  Currency. 

This  list  must  be  accurately  kept  at  all  times,  and  the  shareholders  and  creditors 
and  State  officers  authorized  to  assess  taxes  must  be  afforded  free  access  to  it  during 
the  business  hours  of  each  legal  business  day — all  except  Sundays  or  legal  holidays, 
either  National  or  by  the  law  of  the  State  or  Territory  where  the  bank  is  located. 

4 


5° 

A  copy  of  this  list  as  it  stands  on  the  first  Monday  of  each  year,  duly  executed, 
must  be  sent  to  the  Comptroller.  Blanks  for  this  list  are  sent  to  all  the  banks  from 
the  Comptroller's  office  each  year,  in  time  to  enable  the  bank  to  make  and  send  the 
list. 

87.  Reports  of  Associations  to  Comptroller. 
Section  521 1. — Every  association  shall  make  to  the  Comp- 
troller of  the  Currency  not  less  than  five  reports  during  each 
year,  according  to  the  form  which  may  be  prescribed  by  him, 
verified  by  the  oath  or  affirmation  of  the  president  or  cashier 
of  such  association  and  attested  by  the  signatures  of  at  least 
three  of  the  directors.  Each  such  report  shall  exhibit,  in  de- 
tail and  under  appropriate  heads,  the  resources  and  liabilities 
of  the  associations  at  the  close  of  business  on  any  past  day 
by  him  specified,  and  shall  be  transmitted  to  the  Comptroller 
within  five  days  after  the  receipt  of  a  request  or  requisition 
therefor  from  him,  and  in  the  same  form  in  which  it  is  made 
to  the  Comptroller  shall  be  published  in  a  newspaper  published 
in  the  place  where  such  association  is  established ;  or  if  there 
is  no  newspaper  in  the  place,  then  in  one  published  nearest 
thereto  in  the  same  county,  at  the  expense  of  the  association  ; 
and  such  proof  of  publication  shall  be  furnished  as  may  be 
required  by  the  Comptroller.  The  Comptroller  shall  also  have 
power  to  call  for  special  reports  from  any  particular  association 
whenever  in  his  judgment  the  same  are  necessary  in  order  to 
a  full  and  complete  knowledge  of  its  condition. 

The  blanks  for  these  reports  are  furnished  by  the  Comptroller  of  the  Currency. 
The  attestation  of  the  directors  is  an  attestation  of  the  correctness  of  the  report. 
The  directors  are  expected  to  know  the  condition  of  their  bank.  The  Act  of  Feb- 
ruary 26th,  1881,  provides  before  whom  the  verification  of  these  reports  may  be 
made.  (See  page  106,  of  this  work.)  The  reports,  when  made,  are  abstracted  and 
filed  in  the  Comptroller's  office. 

88.  Reports  of  Dividends,  &c. 
Section  5212. — In  addition  to  the  reports  required  by  the 
preceding  section,  each  association  shall  report  to  the  Comp- 
troller of  the  Currency,  within  ten  days  after  declaring  any 
dividend,  the  amount  of  such  dividend,  and  the  amount  of  net 
earnings  in  excess  of  such  dividend.  Such  reports  shall  be 
attested  by  the  oath  of  the  president  or  cashier  of  the  associa- 
tion. 

Full  instructions  as  to  making  these  reports  will  be  found  on  page  146. 


5* 

89.  Penalty  for  Failure  to  make  Reports. 
Section  5213. — Every  association  which  fails  to  make  and 
transmit  any  report  required  under  either  of  the  two  preceding 
sections  shall  be  subject  to  a  penalty  of  one  hundred  dollars 
for  each  day  after  the  periods,  respectively,  therein  mentioned, 
that  it  delays  to  make  and  transmit  its  report.  Whenever  any 
association  delays  or  refuses  to  pay  the  penalty  herein  imposed, 
after  it  has  been  assessed  by  the  Comptroller  of  the  Currency, 
the  amount  thereof  may  be  retained  by  the  Treasurer  of  the 
United  States,  upon  the  order  of  the  Comptroller  of  the  Cur- 
rency, out  of  the  interest,  as  it  may  become  due  to  the  asso- 
ciation, on  the  bonds  deposited  with  him  to  secure  circulation. 
All  sums  of  money  collected  for  penalties  under  this  section 
shall  be  paid  into  the  Treasury  of  the  United  States. 

These  penalties  for  failure  or  delay  in  making  reports  are  often  enforced. 

90.  Duty  on  Circulation. 
Section  5214. — In  lieu  of  all  existing  taxes,  every  associa- 
tion shall  pay  to  the  Treasurer  of  the  United  States,  in  the 
months  of  January  and  July,  a  duty  of  one-half  of  one  per 
centum  each  half  year  upon  the  average  amount  of  its  notes  in 
circulation,  and  a  duty  of  one-quarter  of  one  per  centum  each 
half  year  upon  the  average  amount  of  its  deposits,  and  a  duty 
of  one-quarter  of  one  per  centum  each  half  year  on  the  average 
amount  of  its  capital  stock,  beyond  the  amount  invested  in 
United  States  bonds. 

All  of  this  tax.  with  the  exception  of  the  tax  on  circulation,  has  now  been  abated 
by  law.  The  tax  is  upon  the  average  amount  of  notes  in  circulation — not  those 
held  by  the  bank  or  in  transit  between  it  and  the  Comptroller's  office.  The  average 
may  be  calculated  by  adding  together  the  amount  of  circulation  outstanding  each 
business  day  of  the  semi-annual  period,  and  then  dividing  by  the  number  of  busi- 
ness days. 

91.  Semi-Annual  Return  of  Circulation. 
Section  5215. — In  order  to  enable  the  Treasurer  to  assess 
the  duties  imposed  by  the  preceding  section,  each  association 
shall,  within  ten  days  from  the  first  days  of  January  and  July 
of  each  year,  make  a  return,  under  the  oath  of  its  president  or 
cashier,  to  the  Treasurer  of  the  United  States,  in  such  form  as 
the  Treasurer  may  prescribe,  of  the  average  amount  of  its 
notes  in  circulation,  and  of  the  average  amount  of  its  deposits, 


52 

and  of  the  average  amount  of  its  capital  stock,  beyond  the 
amount  invested  in  United  States  bonds,  for  the  six  months 
next  preceding  the  most  recent  first  day  of  January  or  July. 
Every  association  which  fails  so  to  make  such  return  shall  be 
liable  to  a  penalty  of  two  hundred  dollars,  to  be  collected  either 
out  of  the  interest  as  it  may  become  due  such  association  on 
the  bonds  deposited  with  the  Treasurer,  or,  at  his  option,  in 
the  manner  in  which  penalties  are  to  be  collected  of  other  cor- 
porations under  the  laws  of  the  United  States. 

The  blanks  for  these  returns  are  sent  to  the  banks  by  the  Treasurer,  and  contain 
full  instructions  as  to  the  proper  manner  in  which  to  make  these  reports. 

92.  Assessment  if  Return  is  not  Made. 
Section  5216. — Whenever  any  association  fails  to  make 
the  half-yearly  return  required  by  the  preceding  section,  the 
duties  to  be  paid  by  such  association  shall  be  assessed  upon 
the  amount  of  notes  delivered  to  such  association  by  the  Comp- 
troller of  the  Currency,  and  upon  the  highest  amount  of  its 
deposits  and  capital  stock,  to  be  ascertained  in  such  manner 
as  the  Treasurer  may  deem  best. 

It  is  usually  the  best  plan  for  the  bank  to  make  up  its  own  average,  as  that  made 
by  the  Treasurer  would  necessarily  include  notes  that  the  bank  might  hold. 

93.  How  Tax  may  be  Collected. 

Section  5217. — Whenever  an  association  fails  to  pay  the 
duties  imposed  by  the  three  preceding  sections,  the  sums  due 
may  be  collected  in  the  manner  provided  for  the  collection  of 
United  States  taxes  from  other  corporations  ;  or  the  Treasurer 
may  reserve  the  amount  out  of  the  interest,  as  it  may  become 
due,  on  the  bonds  deposited  with  him  by  such  defaulting  as- 
sociation. 

94.  Refunding  excess  of  Duties. 

Section  5218. — In  all  cases  where  an  association  has  paid 
or  may  pay  in  excess  of  what  may  be  or  has  been  found  due 
from  it,  on  account  of  the  duty  required  to  be  paid  to  the 
Treasurer  of  the  United  States,  the  association  may  state  an 
account  therefor,  which,  on  being  certified  by  the  Treasurer 
of  the  United  States,  and  found  correct  by  the  First  Comp- 
troller of  the  Treasury,  shall  be  refunded  in  the  ordinary  man- 
ner by  warrant  on  the  Treasury. 

There  is,  however,  no  special  appropriation  for  this  purpose.     The  claim  for  re- 


53 

covery  of  excessive  taxes  paid,  if  presented  and  found  correct  in  the  manner  indi- 
cated in  tliis  section,  is  taken  into  account  by  the  Secretary  of  the  Treasury  in  mak- 
ing his  estimates  to  Congress.  The  amount  necessary  to  pa}*  the  claim  is  usually 
appropriated  by  Congress,  and  the  claimant  will  then  receive  his  money,  by  warrant. 
&C,  as  stated  in  the  section. 

95.  Provisions  Relative  to  State  Taxation. 
Section  5219. — Nothing  herein  shall  prevent  all  the  shares 
in  any  association  from  being  included  in  the  valuation  of  the 
personal  property  of  the  owner  or  holder  of  such  shares,  in  as- 
sessing taxes  imposed  by  authority  of  the  State  within  which 
the  association  is  located;  but  the  Legislature  of  each  State 
may  determine  and  direct  the  manner  and  place  of  taxing  all 
the  shares  of  National  banking  associations  located  within  the 
State,  subject  only  to  the  two  restrictions,  that  the  taxation 
shall  not  be  at  a  greater  rate  than  is  assessed  upon  other  mon- 
eyed capital  in  the  hands  of  individual  citizens  of  such  State, 
and  that  the  shares  of  any  National  banking  association  owned 
by  non-residents  of  any  State  shall  be  taxed  in  the  city  or  town 
where  the  bank  is  located,  and  not  elsewhere.  Nothing  herein 
shall  be  construed  to  exempt  the  real  property  of  associations 
from  either  State,  county,  or  municipal  taxes,  to  the  same  ex- 
tent, according  to  its  value,  as  other  real  property  is  taxed. 

Shares  of  National  banks  are  by  this  section  taxable  by  State  or  municipal  au- 
thority in  the  hands  of  the  individual  holders.  The  theory  of  the  section  seems  to 
be  that  while  the  tax  is  upon  the  individual,  yet  the  method  of  collection  may  be 
indicated  by  the  Legislature  of  the  State,  and  thus  it  comes  through  action  of  the 
State  Legislatures  that  in  most  of  the  States  the  assessors  and  collectors  of  taxes 
deal  only  with  the  bank  which  is  by  State  law  made  the  representative  of  its  indi- 
vidual shareholders.  The  bank  thus  pays  for  its  stockholders.  The  real  property 
of  a  bank  is  taxed  as  other  real  property  is  taxed,  and  the  fact  of  the  taxation  or 
exemption  from  taxation  of  any  particular  asset  of  a  bank,  such  as  real  estate,  which 
is  taxable,  or  United  States  bonds,  legal-tender  notes,  &c,  which  are  exempt  from 
taxation,  does  not  authorize  a  bank  or  an  individual  shareholder  from  making  any 
deduction  from  the  par  value  of  his  shares.  Shares  may  be  assessed  for  taxation  at 
their  par  value,  and  at  their  market  value  if  it  exceeds  par;  but  doubtless  if  it 
could  be  shown  that  the  market  value  was  less  than  par,  the  true  value  so  shown 
would  be  the  basis  of  assessment.  This  subject  has  been  treated  at  length  in  the 
last  report  of  the  Comptroller  of  the  Currency,  and  that  portion  of  the  report  is 
reproduced  here: 

"  The  original  National  Currency  Act  of  February  25th,  1863,  contained  no  pro- 
vision authorizing  the  States  to  tax  National  banks  in  any  manner  whatever.  The 
number  of  banks  organized  under  this  act  was,  however,  comparatively  small,  and 
the  capital  small  compared  with  the  capital  invested  in  banks  organized  under 
State  laws,  over  which  the  States  had  full  power  of  taxation.  Much  of  the  oppo- 
sition to  the  National  system  at  the  time  of  its  inception  was  manifested  by  those 


54 

who  regarded  it  as  hostile  to  the  State  systems,  and  as  a  step  toward  the  removal 
of  one  objection,  at  least,  to  the  State  systems  becoming  merged  in  the  National, 
Congress  seems  to  have  regarded  it  as  necessary  to  grant  to  the  States  the  authority 
to  tax  National  banks.  At  an  early  day  the  Supreme  Court  of  the  United  States 
had  held  that  the  States  had  no  power  to  impose  taxes  on  corporations  created  by 
Congress,  and  the  same  court  has  since  held  that  the  States  cannot  impose  any  tax 
whatever  on  National  banks  without  the  authority  of  Congress.  (Williams  v.  As- 
sessors.) 

"  The  power  to  tax  National  bank  shares  was  granted,  and  the  method  of  im- 
posing such  tax  indicated  by  three  provisos  attached  to  Section  41  of  the  Act  of 
June  3d,  1864,  by  which  the  original  Act  of  February  25th,  1863,  was  superseded. 
Under  this  law  shares  of  National  bank  stock  were  made  liable  to  assessment  by 
State  authority  at  the  place  where  the  bank  was  located,  but  not  at  a  greater  rate 
than  was  assessed  upon  other  moneyed  capital  in  the  hands  of  individual  citizens 
of  such  State,  and  the  tax  imposed  was  not  to  be  at  a  greater  rate  than  was  imposed 
upon  the  shares  of  banks  organized  under  State  law.  Real  estate  belonging  to  a 
National  bank  was  to  be  taxed  as  other  real  estate  was  taxed. 

"  The  question  that  appears  to  have  first  arisen  as  to  the  proper  construction  of 
the  law  permitting  State  taxation  of  National  bank  shares,  was  in  regard  to  the 
exemption  of  United  States  bonds  held  by  National  banks,  in  arriving  at  the  value 
of  the  shares  liable  to  taxation. 

"  This  point  came  before  the  United  States  Supreme  Court  for  decision  in  Van 
Allen  v.  Assessors,  (3  Wall.,  573,)  and  it  was  decided  by  the  majority  of  the  court 
that  a  share  of  National  bank  stock  was  a  distinct  thing  from  the  capital  of  the 
bank,  which  capital  may  be  invested  in  United  States  bonds — that  the  shares  are 
property  in  the  hands  of  individuals,  while  the  corporation  is  the  legal  owner  of  all 
the  property  of  the  bank,  real  and  personal. 

"  The  interest  of  the  shareholder  entitles  him  to  participate  in  the  profits  of  the 
corporation  while  the  latter  is  in  existence,  and  also  upon  its  dissolution  to  receive 
his  proportionate  share  of  such  property  as  may  remain  after  the  payment  of  its 
debts.  It  is  this  entire  interest  that  Congress  has  left  subject  to  taxation  by  the 
States,  and  not  such  portion  as  might  remain  were  the  amount  invested  in  United 
States  bonds  deducted  from  capital. 

"  The  court  also  held  in  this  case  that  a  New  York  statute,  assessing  shares  of 
National  banks  for  purposes  of  taxation  at  the  same  rate  at  which  other  moneyed 
capital  was  assessed,  the  tax  not  to  exceed  the  par  value  of  the  shares,  was  void, 
because  it  was  contrary  to  the  provisions  of  the  Federal  law — that  taxation  of 
National  bank  shares  was  not  to  be  at  a  greater  rate  than  was  imposed  on  State 
bank  shares.  The  State  banks  in  New  York  were  not  taxed  on  their  shares,  but  on 
capital,  from  which  the  deduction  of  the  amount  invested  in  United  States  securities 
was  allowed,  while  this  deduction  could  not  be  made  to  reduce  the  value  of  National 
bank  shares. 

"  The  question  then  arose  in  a  new  form.  Inasmuch  as  the  law  provides  that 
shares  of  National  banks  shall  be  assessed  at  the  same  rate  as  other  moneyed  capital 
in  the  hands  of  individual  citizens,  and  inasmuch  as  United  States  bonds  and 
securities  are  exempt  in  the  hands  of  individual  citizens:  when  the  capital  of 
National  banks  is  invested  in  United  States  bonds,  is  not  the  State  tax  on  their 
shares  owned  by  individuals  invalid?  The  United  States  Supreme  Court  in  People 
v.  Commissioners  (4  Wall.,  244)  decided  that  under  such  circumstances  the  State 
tax  on  National  bank  shares  was  valid.  Under  these  two  decisions  it  is  apparent 
that  no  deduction  can  be  made  from  the  value  of  shares  of  National  banks  on 
account  of  the  exemption  from  tax  of  some  of  the  assets  in  which  their  capital 
may  be  invested.  This  principle  will  apply  to  United  States  notes  and  to  United 
States  or  other  securities  which  may  by  law  be  exempt  from  taxation. 

"The  next  important  case  bearing  on  this  matter,  decided  in  the  United  States 
Supreme  Court,  was  that  of  Lionberger  v.  Rouse.  This  turned  upon  the  construction 
of  that  portion  of  the  Federal  law  providing  that  the  tax  on  National  bank  shares 
should  not  be  at  a  greater  rate  than  was  imposed  on  the  shares  of  State  banks. 
The  point  raised  was  that  the  State  of  Missouri  taxed  some  State  banks  less  than 
others.     These  lightly-taxed  banks,  holding  an  inconsiderable  portion  of  the  bank- 


55 

ing  capital  of  the  State,  were  organized  under  special  charters,  granted  prior  to  the 
commencement  of  the  National  system,  which  the  State  had  no  power  to  change. 
There  was  no  discrimination  as  between  National  bank  shares  and  those  of  State 
banks  not  so  specially  exempted.  The  court  construed  the  clause  of  the  Federal  law 
in  question  to  mean  only  that  the  State,  as  a  condition  to  the  exercise  of  the  power  to 
tax  the  shares  of  National  banks,  shall,  as  far  as  it  has  retained  the  capacity,  tax  in 
like  manner  the  shares  of  banks  of  its  own  creation. 

"  The  Act  of  February  10th,  1868,  was  passed  to  further  define  the  place  and 
manner  of  taxation  of  National  bank  shares,  amending  Section  41  of  the  Act  of 
June  3d,  1864.  It  may  perhaps  be  regarded  as  superseding  that  section  to  the  ex- 
tent of  dropping  out  the  proviso  that  shares  of  National  banks  shall  be  taxed  at  a 
rate  no  greater  than  is  imposed  on  the  shares  of  State  banks.  This  appears  to  be 
the  view  taken  by  Congress  in  1873,  when  approving  the  Revised  Statutes,  as  in 
Section  5219  as  it  now  stands  this  proviso  is  net  included. 

"  The  validity  of  State  taxation  on  National  bank  shares  is,  under  this  section,  to 
be  determined  solely  by  the  inquiry  whether  it  is  at  a  greater  rate  than  is  assessed 
upon  other  moneyed  capital  in  the  hands  of  individual  citizens.  There  has,  however, 
been  great  difficulty  in  so  regulating  the  taxation  of  National  bank  shares  by  the 
States  as  to  conform  strictly  to  the  intent  of  this  law.  As  a  consequence,  in  many 
of  the  States,  National  bank  shares,  in  the  assessment  and  collection  of  taxes,  have, 
it  is  alleged,  been  in  different  ways  subjected  to  severe  and  unjust  discrimination,  as 
compared  with  other  moneyed  capital.  Some  of  the  methods  of  discrimination  are 
as  follows : 

"  (1.)  Differences  are  made  in  the  valuation  of  National  bank  shares  for  purposes 
of  assessing  taxes  as  compared  with  the  valuation  of  other  moneyed  capital  for  the 
same  purpose. 

"  (2.)  The  individual  holders  of  other  moneyed  capital  have  been  allowed  to  make 
deductions  on  account  of  certain  exemptions,  such  as  debts  owed  by  such  individual 
holders,  when  holders  of  National  bank  shares  were  not  permitted  to  deduct  their 
debts  from  the  value  of  such  shares. 

"  (3.)  In  the  different  States  distinctions  are  made  in  the  taxation  of  various  kinds 
of  moneyed  capital,  other  than  National  bank  shares,  in  the  hands  of  individual 
citizens,  and  the  standard  by  which  the  taxation  of  National  bank  shares  is  to  be 
legally  measured  becomes  thus  confused. 

"  Many  forms  of  moneyed  capital  in  the  hands  of  individual  citizens  are  altogether 
exempted  by  law  from  taxation,  while  National  bank  shares  are  taxed.  The  diffi- 
culty arises  in  deciding  by  which  class  of  moneyed  capital  the  tax  on  National 
bank  shares  is  to  be  guided ;  whether  there  is  to  be  no  tax,  as  in  case  of  exempted 
moneyed  capital ;  a  less  tax,  as  in  case  of  the  class  of  moneyed  capital  taxed  at  a 
less  rate;  or  a  greater  tax,  as  in  case  of  the  class  of  moneyed  capital  taxed  at  a 
greater  rate. 

"All  of  these  forms  of  discrimination  have  been  passed  on  in  litigation  which  has 
come  before  the  United  States  Supreme  Court. 

"  In  Ohio  the  law  provided  certain  State  boards  for  equalizing  the  taxation  on 
real  estate,  on  railroad  capital,  and  on  capital  invested  in  bank  shares ;  but  there 
was  no  State  board  for  equalizing  the  taxation  on  personal  property  other  than 
bank  shares,  railroad  stock,  or  other  moneyed  capital.  The  equalization  as  to  all 
other  personal  property  assessed  ceased  with  the  county  boards  of  equalization, 
but  the  county  boards  throughout  the  State  fixed  the  valuation  of  moneyed  capital 
for  purposes  of  taxation  at  six-tenths  of  its  true  value,  while  the  State  board  fixed 
the  taxable  value  of  bank  shares  at  their  actual  cash  value.  The  rates  of  taxation 
being  the  same,  bank  shares  were  discriminated  against  to  the  extent  of  four-tenths 
of  their  value.  In  New  York  the  law  permitted  the  deduction  of  just  debts  of  an 
individual  from  his  personal  property,  including  his  moneyed  capital,  excepting 
only  his  bank  shares. 

"  In  Pelton  v.  Commercial  National  Bank  of  Cleveland,  (101  U.  S.,  p.  143,)  and 
in  Cummings  v.  Merchants'  National  Bank  of  Toledo,  (101  U.  S.,  p.  153,)  the  United 
States  Supreme  Court  decided  the  question  of  discrimination  arising  under  the  laws 
of  Ohio.  In  those  cases  it  was  held  that  a  tax  upon  National  bank  shares  valued 
for  taxation  at  a  higher  rate  than  other  moneyed  capital  was  invalid,  and  that  upon 


56 

payment  of  the  amount  justly  assessable  a  court  of  equity  would  enjoin  the  collec- 
tion of  the  residue,  but  that  the  bank  must  pay  the  portion  of  the  taxes  justly  due. 

"  In  People  v.  Weaver,  (100  U.  S.,  p.  539,)  a  case  arising  under  the  New  York 
law,  the  Supreme  Court  decided  that  the  word  rate  in  the  provision  of  Section 
5219,  United  States  Revised  Statutes,  that  taxation  shall  not  be  at' a  greater  rate 
than  is  assessed  upon  other  moiled  capital  in  the  hands  of  individuals  applies  to 
and  includes  as  well  the  valuation  of  shares  for  taxation  as  the  rate  of  taxes  to  be 
imposed,  and  that  the  law  of  the  State  of  New  York,  which  permitted  a  party  to 
deduct  his  just  debts  from  the  value  of  all  his  personal  property,  except  his  Na- 
tional bank  shares,  was  void  as  to  the  taxation  of  such  bank  shares.  The  case  of 
Evansville  Bank  v.  Britton,  (104  TJ.  S.,  p.  323,)  arising  under  the  law  of  Indiana, 
taxing  National  bank  shares,  supports  the  same  doctrine.  These  cases  disposed  of 
the  first  two  forms  of  discriminations  already  mentioned,  and  pointed  out  the  proper 
remedy  to  be  pursued  by  banks  in  avoiding  the  payment  of  taxes  illegally  assessed. 
Supervisors  v.  Stanley  (104  U.  S.,  p.  305)  decides  questions  arising  as  to  the  recovery 
of  excessive  taxes  which  have  been  paid  by  the  shareholders  of  National  banks. 

"Under  the  third  class  of  discrimination,  where  doubt  as  to  the  proper  taxation 
of  National  bank  shares  arises  from  the  fact  that  under  State  law  a  discrimination 
is  made  in  taxing  different  classes  of  other  moneyed  capital  in  the  hands  of  indi- 
vidual citizens,  the  important  cases  decided  in  the  United  States  Supreme  Court  are 
Lionberger  v.  Rouse,  (9  Wall.,)  already  mentioned ;  Hepburn  v.  School  Directors, 
(23  Wall.,  480,)  and  the  recently  decided  case  of  Boyer  v.  Boyer.  In  Lionberger  v- 
Rouse  a  discrimination  was  made  by  the  State  in  taxing  shares  of  banks  organized 
under  its  own  laws,  one  class  of  banks  being  taxed  at  a  higher  rate  than  another. 
At  that  time,  as  has  been  seen,  the  law  in  force  measured  the  taxation  of  National 
bank  shares  by  the  taxation  of  State  bank  shares,  and  in  this  case  the  United  States 
Supreme  Court  held  a  tax  on  National  bank  shares  to  be  valid  which  did  not  ex- 
ceed the  tax  imposed  upon  the  larger  bulk  of  State  bank  shares.  In  Hepburn  v. 
School  Directors  (23  Wall.,  480)  it  was  held  by  the  United  States  Supreme  Court 
that  the  exemption  by  State  law  from  taxation  of  a  small  portion  of  other  moneyed 
capital  in  the  hands  of  individual  citizens  was  not  a  reason  for  exempting  National 
bank  shares  from  taxation.  In  this  case  also  it  was  held  that  shares  of  National 
banks  might  be  taxed  at  an  amount  exceeding  their  par  value  if  their  market  value 
exceeded  their  par  value. 

"  In  the  case  of  Boyer  v.  Boyer  the  Supreme  Court  decided  that  if  the  great  bulk 
of  moneyed  capital  in  the  hands  of  individual  citizens  is  exempted  by  State  law 
from  municipal  taxation,  that  under  the  law  of  Congress  National  bank  shares  must 
be  exempted  also.  The  court  says  that  cases  will  arise  in  which  it  will  be  difficult 
to  determine  whether  the  exemption  of  the  particular  part  of  moneyed  capital  in 
individual  hands  is  so  serious  or  material  as  to  infringe  the  rules  of  substantial 
equality — that  a  proper  construction  of  the  Act  of  Congress  forces  the  conclusion 
that  capital  invested  in  National  bank  shares  was  intended  to  be  placed  upon  the 
same  footing  of  substantial  equality  in  respect  to  taxation  by  State  authority  with 
other  moneyed  capital  in  the  hands  of  individual  citizens,  however  invested. 

"The  question  is  frequently  asked  whether  National  bank  notes  in  the  hands  of 
individual  citizens  are  liable  to  State  taxation.  Section  3707  of  the  Revised  Stat- 
utes provides  that  all  stocks,  bonds,  Treasury  notes,  and  other  obligations  of  the 
United  States  shall  be  exempt  from  taxation  by  or  under  State,  or  municipal,  or 
local  authority.  In  Section  5413,  Revised  Statutes,  the  words  'obligation  of  the 
United  States'  is  held  to  include  National  bank  currency.  The  question  of  the 
taxability  of  National  bank  currency  arose  in  the  case  of  the  Board  of  Commis- 
sioners in  Montgomery  County  v.  Elston,  (32  Ind.,  27,)  and  it  was  decided  by  the 
Supreme  Court  of  the  State  that  National  bank  currency  is  not  exempt  from  taxa- 
tion by  the  State.  The  court  held  that  the  provision  of  law  making  National  cur- 
rency an  obligation  of  the  United  States  only  intended  to  throw  around  National 
currency  the  same  guards  against  counterfeiting  that  were  by  law  provided  for  ob- 
ligations of  the  United  States,  and  not  to  generally  define  National  currency,  as  an 
obligation  of  the  United  States. 

"In  the  case  of  Home  v.  Greene,  in  the  Supreme  Court  of  the  State  of  Missis- 
sippi, (52  Miss.,  452,)  it  was  decided  that  the  circulating  notes  of  National  banks 


57 

are  not  subject  to  State  taxes.     The  question,  therefore,  still  appears  to  be  an  open 
one." 

It  only  remains  to  add  that  under  various  decisions  a  license  tax  imposed  on 
National  banks  by  State  or  municipal  authority  has  been  decided  to  be  illegal  and 
void,  a  tax  on  shares  being  the  exclusive  way  in  which  such  banks  may  be  taxed 
by  State  authority. 

96.  Bank  Examiners  :  Duties,  Powers,  &e. 
Section  5240. — The  Comptroller  of  the  Currency,  with  the 
approval  of  the  Secretary  of  the  Treasury,  shall,  as  often  as 
shall  be  deemed  necessary  or  proper,  appoint  a  suitable  person 
or  persons  to  make  an  examination  of  the  affairs  of  every  bank- 
ing association,  who  shall  have  power  to  make  a  thorough  ex- 
amination into  all  the  affairs  of  the  association,  and,  in  doins: 
so,  to  examine  any  of  the  officers  and  agents  thereof  on  oath  ; 
and  shall  make  a  full  and  detailed  report  of  the  condition  of 
the  association  to  the  Comptroller.  All  persons  appointed  to 
be  examiners  of  National  banks  not  located  in  the  redemption 
cities  specified  in  section  five  thousand  one  hundred  and  nine- 
ty-two of  the  Revised  Statutes  of  the  United  States,  or  in  any 
one  of  the  States  of  Oregon,  California,  and  Nevada,  or  in  the 
Territories,  shall  receive  compensation  for  such  examination 
as  follows  :  For  examining  National  banks  having  a  capital 
less  than  one  hundred  thousand  dollars,  twenty  dollars  ;  those 
having  a  capital  of  one  hundred  thousand  dollars  and  less  than 
three  hundred  thousand  dollars,  twenty-five  dollars;  those  hav- 
ing acapital  of  three  hundred  thousand  dollars  and  less  than  four 
hundred  thousand  dollars,  thirty-five  dollars ;  those  having  a 
capital  of  four  hundred  thousand  dollars  and  less  than  five 
hundred  thousand  dollars,  fort}' dollars;  those  having  a  capital 
of  five  hundred  thousand  dollars  and  less  than  six  hundred 
thousand  dollars,  fifty  dollars  ;  those  having  a  capital  of  six 
hundred  thousand  dollars  and  over,  seventy-five  dollars;  which 
amounts  shall  be  assessed  by  the  Comptroller  of  the  Currency 
upon,  and  paid  by,  the  respective  associations  so  examined,  and 
shall  be  in  lieu  of  the  compensation  and  mileage  heretofore 
allowed  for  making  said  examinations;  and  persons  appointed 
to  make  examinations  of  National  banks  in  the  cities  named 
in  section  five  thousand  one  hundred  and  ninety-two  of  the" 
Revised  Statutes  of  the  United  States,  or  in  any  one  of  the 
States  of  Oregon,  California,  and  Nevada,  or  in  the  Territories, 


58 

shall  receive  such  compensation  as  may  be  fixed  by  the  Sec- 
retary of  the  Treasury  upon  the  recommendation  of  the  Comp- 
troller of  the  Currency ;  and  the  same  shall  be  assessed  and 
paid  in  the  manner  hereinbefore  provided.  But  no  person 
shall  be  appointed  to  examine  the  affairs  of  any  banking  asso- 
ciation of  which  he  is  a  director  or  other  officer. 

See  Act  of  February  19th,  1875,  amending  Rev.  Stats.,  page  99.  Also  Act  of 
July  12th,  1882,  sec.  3,  page  108. 

The  examinations  mentioned  in  this  section  are,  as  a  rule,  made  about  once  a 
year  in  the  case  of  each  National  bank.  There  is  no  provision  as  to  the  number  of 
persons  who  may  be  employed  as  examiners  by  the  Comptroller,  or  the  number  of 
times  he  may  examine  each  bank  within  a  given  period.  In  practice,  the  territory 
of  the  United  States  is  laid  off  into  districts,  which  districts  are,  however,  varied 
from  time  to  time  to  suit  the  convenience  of  the  Comptroller's  office,  or  to  conform 
to  its  views  as  to  the  efficiency  of  the  service. 

A  National  bank  examiner  receives  a  regular  appointment  and  then  awaits  orders 
from  the  Comptroller.  He  may  be  assigned  to  a  district,  or  may  be  employed  at 
large.  An  examiner  may  be  employed  steadily  in  one  district,  or  he  may  be 
shifted  from  one  district  to  another.  There  is  no  fixed  salary.  The  amount  earned 
each  year  depends  on  the  number  of  banks  which  each  examiner  has  assigned  to  him 
for  examination.  When  the  reports  are  received  from  the  examiners  they  are  scru- 
tinized in  the  Comptroller's  office,  and  if  they  iudicate  faults  in  the  management  of  the 
banks,  letters  are  addressed  usually  to  the  president  or  cashier  calling  attention  to 
the  points  where  improvement  is  necessary  ;  sometimes,  in  bad  cases,  the  directors 
are  addressed  either  singly  or  collectively.  The  examiners  from  time  to  time  send 
in  their  bills  to  the  Comptroller,  who,  finding  such  bills  correct,  assesses  each  bank 
of  which  examination  has  been  made  according  to  the  legal  rule.  When  the  money 
is  paid  in  to  the  Comptroller  by  the  banks  it  is  sent  to  the  examiner.  The  exam- 
iner has  no  right  to  ask  a  bank  for  any  money  in  any  way,  shape,  or  form.  His 
dealings  are  with  the  Comptroller,  from  whom  he  receives  his  directions  and  to 
whom  he  renders  his  bills. 

97.  Limitation  of  Visitorial  Powers. 
Section  5241. — No  association  shall  be  subject  to  any  vis- 
itorial powers  other  than  such  as  are  authorized  by  this  Title, 
or  are  vested  in  the  courts  of  justice. 

Section  5242,  page  70. 

The  only  visitorial  powers  mentioned  in  the  Act  are  those  mentioned  in  the  pre- 
ceding section  and  in  Section  5210,  which  permits  officers  authorized  to  assess  taxes 
under  State  authority  to  inspect  list  of  stockholders  during  business  hours.  There 
are,  also,  the  general  visitorial  powers  of  the  Comptroller  of  the  Currency.  The 
courts  of  justice  have  of  course  the  same  power  as  they  have  over  other  persons  or 
corporations,  and  subject  to  the  same  limitations  of  jurisdiction. 

98.  Use  of  the  word  "National"  in  the  Title. 

Section  5243. — All  banks  not  organized  and  transacting 


59 

business  under  the  National  currency  laws,  or  under  this  Title, 
and  all  persons  or  corporations  doing  the  business  of  bankers, 
brokers,  or  savings  institutions,  except  savings  banks  author- 
ized by  Congress  to  use  the  word  ' '  national  "  as  a  part  of  their 
corporate  name,  are  prohibited  from  using  the  word  ' '  national ' ' 
as  a  portion  of  the  name  or  title  of  such  bank,  corporation, 
firm,  or  partnership;  and  any  violation  of  this  prohibition  com- 
mitted after  the  third  day  of  September,  eighteen  hundred  and 
seventy-three,  shall  subject  the  party  chargeable  therewith  to 
a  penalty  of  fifty  dollars  for  each  day  during  which  it  is  com- 
mitted or  repeated. 

The  penalty  under  this  section  is  a  general  one.  If  any  one  has  knowledge  of  a 
violation  of  this  provision  he  can  lay  a  complaint  before  a  United  States  commis- 
sioner, or  the  attention  of  the  United  States  attorney  of  the  district  where  the  offense 
has  been  committed  can  be  called  to  it. 

DISSOLUTION    AND    RECEIVERSHIP. 
99.   Voluntary  Liquidation. 
Section  5220. — Any  association  may  go  into  liquidation 
and  be  closed  by  the  vote  of  its  shareholders  owning  two-thirds 
of  its  stock. 

Stockholders  owning  two-thirds  of  the  stock  of  a  National  bank  have  it  in  their 
power  to  close  their  association  at  any  time.  As  a  vote  is  necessary  a  meeting  must 
be  held.  Due  notice  of  a  meeting  for  this  purpose  should  be  given  to  each  stock- 
holder. Legal  notice  under  the  laws  of  the  State  where  the  bank  is  located  is  all 
that  is  required.  This  may  be  by  mail  or  by  publication.  A  stockholder  who  re- 
ceives legal  notice  and  who  does  not  attend  the  meeting,  either  in  person  or  by 
proxv,  cannot  protest  against  anything  legally  done  at  that  meeting.  Two-thirds 
of  the  stock  must  vote  for  the  liquidation,  and  it  is  best  to  keep  a  complete  and 
accurate  record  of  the  proceedings  of  the  meeting.  In  the  conduct  of  the  meeting 
the  by-laws  of  the  bank,  if  any  have  been  adopted,  should  be  strictly  observed. 
There  is  no  need  of  consulting  the  Comptroller's  office  in  regard  to  this  action ;  it 
is  one  that  can  be  taken  by  the  stockholders  of  their  own  volition. 

100.  Notice  of  Intention  to  go  into  Liquidation. 
Section  5221. — Whenever  a  vote  is  taken  to  go  into  liqui- 
dation it  shall  be  the  duty  of  the  board  of  directors  to  cause 
notice  of  this  fact  to  be  certified,  under  the  seal  of  the  associa- 
tion, by  its  president  or  cashier,  to  the  Comptroller  of  the 
Currency,  and  the  publication  thereof  to  be  made  for  a  period 
of  two  months  in  a  newspaper  published  in  the  city  of  New 
York,  and  also  in  a  newspaper  published  in  the  city  or  town 
in  which  the  association  is  located,  or  if  no  newspaper  is  there 


6o 

published,  then  in  the  newspaper  published  nearest  thereto, 
that  the  association  is  closing  up  its  affairs,  and  notifying  the 
holders  of  its  notes  and  other  creditors  to  present  the  notes 
and  other  claims  against  the  association  for  payment. 

Blanks  for  certifying  the  notice  to  the  Comptroller  of  the  Currency  are  furnished 
by  that  office,  and  can  be  obtained  on  application  there;  also  form  to  be  used  in 
making  the  publication  required  by  the  section.  The  liquidation  takes  effect  on 
the  date  of  the  vote  and  not  on  the  receipt  of  the  notice  by  the  Comptroller,  or  it 
may  take  effect  on  some  future  date  fixed  in  that  notice.  Thus  two-thirds  of  the 
stock  may  vote  to  liquidate ;  the  vote  may  be  taken  on  the  third  of  the  month  ; 
the  notice  maybe  sent  on  the  sixth  and  be  received  by  the  Comptroller  on  the  ninth. 
The  books  of  the  Comptroller's  office  will  place  the  association  in  liquidation  on 
the  third,  but  if  the  vote  be  taken  on  the  third  to  commence  to  liquidate  the  associ- 
ation on  the  twentieth,  then,  although  the  Comptroller  as  before  may  receive  notice 
on  the  ninth,  yet  the  date  of  liquidation  will  be  the  twentieth.  Insertion  of  notice 
in  weekly  papers,  both  in  New  York  and  at  home,  is  regarded  as  fulfilling  the  re- 
quirement of  the  law.  The  notice  should  appear  in  each  issue  of  the  paper  within 
the  two  months  from  the  date  of  the  first  issue  in  which  the  notice  appears. 

Associations  in  voluntary  liquidation  retain  their  corporate  existence,  and  can 
sue  or  be  sued  until  their  affairs  are  finally  liquidated.  The  process  of  liquidation 
may  be  conducted  by  the  directors  and  officers  of  the  bank,  or  the  directors  may 
appoint  a  committee  from  their  own  number  for  the  purpose.  In  any  event  it  is 
better  to  keep  up  the  board  of  directors  by  regular  annual  elections  until  the 
liquidation  is  complete.  The  usual  course  is  to  pay  depositors  in  full,  and  then,  as 
funds  are  realized  from  assets,  pay  pro  rata  dividends  to  stockholders.  Usually 
there  is  a  residue  of  deposits  which  are  not  called  for.  Before  dividends  are  paid  to 
stockholders  funds  to  meet  this  residue  if  called  for  should  be  set  aside.  Doubtless, 
after  due  published  notice  of  liquidation,  the  statute  of  limitations  in  the  State 
where  the  bank  is  located  would  begin  to  run  perhaps  from  the  date  of  the  last 
published  notice.  This  may  be  a  question.  In  the  case  of  a  going  bank  it  runs 
from  the  date  of  demand;  but  it  would  seem  that  where  a  bank  closes  its  affairs 
and  notifies  the  public  to  make  demand  the  statute  should  begin  to  run  at  furthest 
from  the  last  published  notice.  Profit  on  notes  not  presented  for  redemption  appar- 
ently goes  to  the  Government.  A  bank  in  voluntary  liquidation  is  still  subject  to 
the  inspection  of  the  Comptroller  of  the  Currency.  He  can  require  reports  from  it 
and  cause  examination  to  be  made  of  its  affairs.  If  it  fails  to  pay  its  depositors  he 
may  appoint  a  receiver.     (See  Section  1,  Act  of  June  30th,  1876,  page  101.) 

101.  Deposit  to  Redeem  Circulation. 
Section  5222. — Within  six  months  from  the  date  of  the 
vote  to  go  into  liquidation,  the  association  shall  deposit  with 
the  Treasurer  of  the  United  States  lawful  money  of  the  United 
States  sufficient  to  redeem  all  its  outstanding  circulation.  The 
Treasurer  shall  execute  duplicate  receipts  for  money  thus  de- 
posited, and  deliver  one  to  the  association  and  the  other  to  the 
Comptroller  of  the  Currency,  stating  the  amount  received  by 


6i 

him,  and  the  purpose  for  which  it  has  been  received;  and  the 
money  shall  be  paid  into  the  Treasury  of  the  United  States, 
and  placed  to  the  credit  of  such  association  upon  redemption 
account. 

If  not  otherwise  determined,  the  vote  to  liquidate  takes  effect  immediately,  and 
the  six  months  run  from  that  date;  but  if  the  vote  itself  is  that  the  liquidation 
shall  take  place  at  a  future  date,  then  that  future  date  is  the  actual  date  on  which 
the  vote  takes  effect,  and  the  six  mouths  run  therefrom.  Lawful  money  is  United 
States  gold  coin,  silver  dollars,  or  legal-tender  notes.  The  usual  method  is  to 
make  the  deposit  either  directly  or  through  a  correspondent  or  agent  with  the 
Treasurer  of  the  United  States  at  Washington,  or  an  Assistant  Treasurer.  When 
the  deposit  is  made  with  an  Assistant  Treasurer,  he  issues  certificate  of  deposit, 
which  is  sent  to  Washington.  When  the  deposit  is  made,  and  the  bank  has  paid  to 
the  United  States  Treasurer  all  amounts  due  for  taxes  on  circulation  and  all  amounts 
due  for  expenses  of  redeeming  notes,  its  bonds  on  deposit  will  be  surrendered  to  it. 

102.   Consolidating  Banks  need  not  Make  Deposit. 

Section  5223. — An  association  which  is  in  good  faith  wind- 
ing up  its  business  for  the  purpose  of  consolidating  with  an- 
other association  shall  not  be  required  to  deposit  lawful  money 
for  its  outstanding  circulation  ;  but  its  assets  and  liabilities 
shall  be  reported  by  the  association  with  which  it  is  in  process 
of  consolidation. 

Although  this  section  still  stands  on  the  statute-book,  it  has  been  regarded  as  ob- 
solete by  a  ruling  of  the  Comptroller's  office.  That  office  has  required  liquidating 
banks,  no  matter  for  what  purpose  they  are  winding  up,  to  deposit  lawful  money  in 
all  cases.  The  reasoning  appears  to  be  that  this  section  was  intended  to  enable 
banks  to  retain  all  their  circulation  at  a  time  when  the  law  fixed  a  limit,  viz.r 
$354,000,000,  on  the  aggregate  circulation,  and  when  such  circulation  was  appor- 
tioned according  to  wealth  and  population  among  the  States  and  Territories.  As 
there  is  now  no  limit  on  the  circulation  which  may  be  issued  in  any  State,  there  is 
not  the  same  necessity  of  banks  adopting  the  plan  provided  for  in  this  section  to 
retain  in  the  consolidated  bank  the  circulation  issued  to  each  of  the  two  banks  en- 
tering into  the  consolidation.  There  are  many  other  considerations  why  this  plan 
is  not  a  good  one,  even  if  legal,  at  the  present  time;  such  as  the  rights  of  stock- 
holders, &c. 

The  best  plan,  if  two  banks  desire  to  consolidate,  is  to  increase  (sec  Section  5142) 
the  capital  of  No.  1  to  the  extent  necessary  to  equal  the  stock  of  both  ;  put  No.  2  in 
liquidation  in  the  regular  way,  and  sell  out  its  assets  to  No.  1,  paying  for  them  in 
the  increased  stock  to  be  distributed  among  stockholders  of  No.  2.  The  circulation 
of  No.  2  being  provided  for  by  a  deposit  of  lawful  money,  its  bonds  can  be  trans- 
ferred to  account  of  No.  1,  which  last  will  receive  circulation  thereon.  The  whole 
tion  in  regard  to  circulation  need  not  occupy  over  ten  days.  The  lawful 
money  can  doubtless  be  borrowed  for  the  necessary  time. 


62 


103.  Reassignment  of  Bonds,  Redemption  of  Notes,  &c. 
Section  5224. — Whenever  a  sufficient  deposit  of  lawful 
monev  to  redeem  the  outstanding  circulation  of  an  association 
proposing  to  close  its  business  has  been  made,  the  bonds  de- 
posited by  the  association  to  secure  payment  of  its  notes  shall 
be  reassigned  to  it,  in  the  manner  prescribed  by  section  fifty- 
one  hundred  and  sixty-two.  And  thereafter  the  association 
and  its  shareholders  shall  stand  discharged  from  all  liabilities 
upon  the  circulating  notes,  and  those  notes  shall  be  redeemed 
at  the  Treasury  of  the  United  States.  And  if  any  such  bank 
shall  fail  to  make  the  deposit  and  take  up  its  bonds  for  thirty 
days  after  the  expiration  of  the  time  specified,  the  Comptroller 
of  the  Currency  shall  have  power  to  sell  the  bonds  pledged  for 
the  circulation  of  said  bank,  at  public  auction  in  New  York 
city,  and,  after  providing  for  the  redemption  and  cancellation 
of  said  circulation,  and  the  necessary  expenses  of  the  sale,  to 
pay  over  any  balance  remaining  to  the  bank  or  its  legal  repre- 
sentative. 

See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  9T. 

After  deposit  of  lawful  money  has  been  made  and  bonds  withdrawn  and  re- 
assigned, the  notes  become  a  liability  of  the  United  States.  It  will  be  observed 
that  this  section  grants  thirty  days  beyond  the  six  months  mentioned  in  Section 
5222  before  the  bonds  can  be  sold  by  the  Comptroller.  The  bank  will  probably,  as 
a  rule,  find  it  more  advantageous  to  dispose  of  its  own  bonds. 

104.  Destruction  of  Redeemed  Notes. 
Section  5225. — Whenever  the  Treasurer  has  redeemed  any 
of  the  notes  of  an  association  which  has  commenced  to  close 
its  affairs  under  the  six  [five]  preceding  sections,  he  shall  cause 
the  notes  to  be  mutilated  and  charged  to  the  redemption  ac- 
count of  the  association;  and  all  notes  so  redeemed  by  the 
Treasurer  shall,  every  three  months,  be  certified  to  and  burned 
in  the  manner  prescribed  in  section  fifty-one  hundred  and 
eighty-four. 

See  Act  of  June  23d,  1874,  page  94. 

Although  the  preceding  section  (5224)  relieves  the  bank  of  all  liability  on  account 
of  its  circulating  notes,  yet  this  section  provides  that  every  three  months  such  of  its 
notes  as  have  been  redeemed  by  the  Treasurer  of  the  United  States  shall  be  certified 
to  and  burned  in  the  manner  prescribed  in  Section  5184.  Section  5184,  as  modified 
by  custom,  provides  that  redeemed  and  mutilated  notes  shall  be  destroyed  in  the 
presence  of  four  persons,  who  must  sign  a  certificate  to  that  e'ffect.  a  duplicate  of 
which  must  be  forwarded  to  the  association. 


63 

105.  Mode  of  Protesting  Notes. 
Section  5226. — Whenever  any  National  banking  association 
fails  to  redeem  in  the  lawful  money  of  the  United  States  any 
of  its  circulating  notes,  upon  demand  of  payment  duly  made 
during  the  usual  hours  of  business,  at  the  office  of  such  asso- 
ciation, or  at  its  designated  place  of  redemption,  the  holder 
may  cause  the  same  to  be  protested,  in  one  package,  by  a  notary 
public,  unless  the  president  or  cashier  of  the  association  whose 
notes  are  presented  for  payment,  or  the  president  or  cashier 
of  the  association  at  the  place  at  which  they  are  redeemable, 
offers  to  waive  demand  and  notice  of  the  protest,  and,  in  pur- 
suance of  such  offer,  makes,  signs,  and  delivers  to  the  party 
making  such  demand  an  admission  in  writing,  stating  the  time 
of  the  demand,  the  amount  demanded,  and  the  fact  of  the  non- 
payment thereof.  The  notary  public,  on  making  such  protest, 
or  upon  receiving  such  admission,  shall  forthwith  forward  such 
admission  or  notice  of  protest  to  the  Comptroller  of  the  Cur- 
rency, retaining  a  copy  thereof.  If,  however,  satisfactory 
proof  is  produced  to  the  notary  public  that  the  payment  of  the 
notes  demanded  is  restrained  by  order  of  any  court  of  compe- 
tent jurisdiction,  he  shall  not  protest  the  same.  When  the 
holder  of  any  notes  causes  more  than  one  note  or  package  to 
be  protested  on  the  same  day,  he  shall  not  receive  pay  for  more 
than  one  protest. 

It  is,  perhaps,  open  to  dispute  whether  a  bank,  after  it  has  deposited  lawful  money 
to  retire  a  portion  of  its  circulation  under  the  Act  of  June  20th,  1874,  page  87,  is 
obliged  to  redeem  its  notes  at  its  own  counter  until  the  deposit  of  lawful  money  is 
exhausted  by  presentation  of  notes  at  the  Treasury.  In  other  words,  it  is  held  by 
some  that  while  lawful  money  remains  on  deposit  in  the  Treasury  the  bank  might 
refuse  to  redeem  a  note  presented  at  its  own  counter,  and  refer  the  presenter  to  the 
Treasury.  However  this  may  be,  while  Section  5226  is  in  force,  a  bank  might  place 
itself  in  a  very  disagreeable  position,  and  perhaps  injure  its  credit,  by  refusing  to 
redeem  any  of  its  notes  at  its  own  counter,  that  is,  as  long  as  it  continues  a  going 
bunk. 

106.  Examination  by  Special  Agent. 
Section  5227. — On  receiving  notice  that  any  National  bank- 
ing association  has  failed  to  redeem  any  of  its  circulating  notes, 
as  specified  in  the  preceding  section,  the  Comptroller  of  the 
Currency,  with  the  concurrence  of  the  Secretary  of  the  Treas- 
ury, may  appoint  a  special  agent,  of  whose  appointment  im- 


64 

mediate  notice  shall  be  given  to  such  association,  who  shall 
immediately  proceed  to  ascertain  whether  it  has  refused  to  pay 
its  circulating  notes  in  the  lawful  money  of  the  United  States, 
when  demanded,  and  shall  report  to  the  Comptroller  the  fact 
so  ascertained.  If  from  such  protest,  and  the  report  so  made, 
the  Comptroller  is  satisfied  that  such  association  has  refused 
to  pay  its  circulating  notes  and  is  in  default,  he  shall,  within 
thirty  days  after  he  has  received  notice  of  such  failure,  declare 
the  bonds  deposited  by  such  association  forfeited  to  the  United 
States,  and  they  shall  thereupon  be  so  forfeited. 

The  first  penalty  for  duly-proved  failure  to  redeem  circulating  notes  is  forfeiture 
of  bonds  deposited  to  secure  the  same.  The  penalty  in  this  section  seems  to  be 
aimed  particularly  at  a  bank  which,  while  not  insolvent  in  the  sense  of  insufficient 
assets,  had  through  mismanagement  permitted  its  lawful  money  to  run  short.  A 
bank  might  have  many  available  assets,  and  even  money  in  the  shape  of  notes  of 
other  banks,  and  yet  not  have  gold,  silver  dollars,  or  legal-tender  notes  to  redeem 
its  own  notes.  This  section  also  had  in  view  the  accrediting  of  legal-tender  notes 
by  compelling  the  banks  to  keep  them  on  hand. 

107.  Not  to  do  Business  after  Protest  of  Notes. 
Section  5228. — After  a  default  on  the  part  of  an  association 
to  pay  any  of  its  circulating  notes  has  been  ascertained  by  the 
Comptroller,  and  notice  thereof  has  been  given  by  him  to  the 
association,  it  shall  not  be  lawful  for  the  association  suffering 
the  same  to  pay  out  any  of  its  notes,  discount  any  notes  or 
bills,  or  otherwise  prosecute  the  business  of  banking,  except 
to  receive  and  safely  keep  money  belonging  to  it,  and  to  de- 
liver special  deposits. 

See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  97. 

The  next  penalty  is  stoppage  of  all  business.  The  exceptions  are  the  taking  in  of 
money  in  payment  of  notes  and  other  obligations  due  the  bank,  and  the  delivery  of 
special  deposits. 

As  this  section  provides  for  the  delivery  of  special  deposits,  the  United  States 
Supreme  Court  has  decided  that  National  banks  have  power  to  receive  such  deposits. 
(See  National  Bank  v.  Graham,  100  U.  S.,  699.)  Doubtless  a  National  bank  has  a 
right  to  establish  a  department  within  itself  for  the  receipt  of  special  deposits,  and 
can  thus  secure  to  itself  a  part  of  the  business  of  the  National  safe  deposit  com- 
panies. This  is  the  proper  course  to  pursue,  making  a  charge  for  the  accommo- 
dation which  will  insure  proper  safeguards,  and  at  the  same  time  separating  the 
special  deposit  business  from  its  regular  business. 

108.    Redemption  of  Notes  at  Treasury. 

Section  5229. — Immediately  upon  declaring  the  bonds  of 

an  association  forfeited  for  non-payment  of  its  notes,  the  Comp- 


65 

troller  shall  give  notice,  in  such  manner  as  the  Secretary  of 
the  Treasury  shall,  by  general  rules  or  otherwise,  direct,  to 
the  holders  of  the  circulating  notes  of  such  association,  to  pre- 
sent them  for  payment  at  the  Treasury  of  the  United  States  ; 
and  the  same  shall  be  paid  as  presented  in  lawful  money  of  the 
United  States  ;  whereupon  the  Comptroller  may,  in  his  discre- 
tion, cancel  an  amount  of  bonds  pledged  by  such  association 
equal  at  current  market  rates,  not  exceeding  par,  to  the  notes 
paid. 

109.    Sale  of  Bonds;  the  U.  S.  to  have  a  Lien  upon  Assets. 

Section  5230. — Whenever  the  Comptroller  has  become  satis- 
fied, by  the  protest  or  the  waiver  and  admission  specified  in 
section  fifty-two  hundred  and  twenty-six,  or  by  the  report 
provided  for  in  section  fifty-two  hundred  and  twenty-seven, 
that  any  association  has  refused  to  pay  its  circulating  notes,  he 
may,  instead  of  canceling  its  bonds,  cause  so  much  of  them  as 
may  be  necessary  to  redeem  its  outstanding  notes  to  be  sold  at 
public  auction  in  the  city  of  New  York,  after  giving  thirty 
days'  notice  of  such  sale  to  the  association.  For  any  deficiency 
in  the  proceeds  of  all  the  bonds  of  an  association,  when  thus 
sold,  to  reimburse  to  the  United  States  the  amount  expended 
in  paying  the  circulating  notes  of  the  association,  the  United 
States  shall  have  a  paramount  lien  upon  all  its  assets ;  and 
such  deficiency  shall  be  made  good  out  of  such  assets  in  prefer- 
ence to  any  and  all  other  claims  whatsoever,  except  the  neces- 
sary costs  and  expenses  of  administering  the  same. 

Instead  of  canceling  the  bonds,  the  Comptroller  may  sell  at  public  auction  to  re- 
imburse the  United  States,  giving  thirty  days'  notice  to  the  association.  This  and 
Sections  5226,  5227,  5228,  and  5229  do  not  necessarily  presume  insolvency,  but  only 
neglect,  wilful  or  otherwise,  to  redeem  their  notes.  Thus  the  managers  of  a  solvent 
bank  might  deem  it  to  their  advantage  to  suspend  payment  of  notes  in  lawful  money 
for  a  time.  Such  a  course  is  removed  by  these  sections  from  the  discretion  of  the 
directors  or  management. 

110.  Sale  of  Bonds  at  Private  Sale. 
Section  5231. — The  Comptroller  may,  if  he  deems  it  for  the 
interest  of  the  United  States,  sell  at  private  sale  any  of  the 
bonds  of  an  association  shown  to  have  made  default  in  paying 
its  notes,  and  receive  therefor  either  money  or  the  circulating 
notes  of  the  association.     But  no  such  bonds  shall  be  sold  bv 


66 

private  sale  for  less  than  par,  nor  for  less  than  the  market  value 
thereof  at  the  time  of  sale;  and  no  sales  of  any  such  bonds, 
either  public  or  private,  shall  be  complete  until  the  transfer  of 
the  bonds  shall  have  been  made  with  the  formalities  prescribed 
by  sections  fifty-one  hundred  and  sixty-two,  fifty-one  hundred 
and  sixty-three,  and  fifty-one  hundred  and  sixty-four. 

This  section  gives  the  further  discretion  to  the  Comptroller  of  selling  bonds  of  de- 
faulting associations  at  private  sale  at  full  uuuket  price,  not  less  than  par. 

111.  Disposition  to  be  made  of  Notes  redeemed  by  Treasurer. 
Section  5232. — The  Secretary  of  the  Treasury  may,  from 
time  to  time,  make  such  regulations  respecting  the  disposition 
to  be  made  of  circulating  notes  after  presentation  at  the  Treas- 
ury of  the  United  States  for  payment,  and  respecting  the  per- 
petuation of  the  evidence  of  the  payment  thereof,  as  may  seem 
to  him  proper. 

This  section  was  originally  part  of  Section  47  of  the  Act  of  June  3d,  1864,  and 
had  application  only  to  notes  of  banks  in  default,  the  bonds  of  which  were  forfeited, 
and  which  notes  were  redeemed,  under  a  further  provision  of  the  same  Section  47, 
(now  Section  5229  ante,)  at  the  Treasury  of  the  United  States. 

This  section  leaves  to  the  discretion  of  the  Secretary  of  the  Treasury  the  disposition 
to  be  made  of  this  particular  class  of  notes.  If  Section  5232  as  it  now  stands  is 
construed  to  apply  solely  to  the  notes  of  banks  in  default  redeemed  at  the  Treasury, 
then  a  certificate  of  destruction  of  all  other  classes  of  notes  redeemed  at  the  Treas- 
ury, whether  of  banks  in  liquidation  or  of  banks  retiring  circulation,  must  be  fur- 
nished to  the  respective  associations  issuing  the  notes,  as  the  mode  of  destruction  of 
all  other  classes  of  notes  is  fixed  in  the  various  sections  of  the  law  regarding  the 
same  by  reference  to  Section  5184.  (See  Section  5225,  R.  S. ;  Section  3  of  the  Act 
of  June  20th,  1874;  Sections  6  and  7  of  the  Act  of  July  12th,  1882,  pp.  109,  110,  and 
Section  5184,  p.  36.) 

112.    Cancellation  of  Notes. 
Section  5233. — All  notes  of  National  banking  associations 
presented  at  the  Treasury  of  the  United  States  for  payment 
shall,  on  being  paid,  be  canceled. 

See  Act  of  June  20th,  1874,  Section  3,  p.  88,  modified  as  to  notes  fit  for  circula- 
tion redeemed  from  the  five  per  cent,  redemption  fund,  by  the  Act  of  June  20th, 
1874,  which  permits  such  notes  to  be  returned  to  the  banks  for  reissue. 

113.   Appointment  and  Duties  of  Receivers.  * 
Section  5234. — On  becoming  satisfied,  as  specified  in  sec- 
tions fifty-two  hundred  and  twenty-six  and  fifty-two  hundred 
and  twenty-seven,  that  any  association  has  refused  to  pay  its 
circulating  notes,  as  therein  mentioned,  and  is  in  default,  the 

♦See  Act  March  29,  1886.  page   115  A. 


67 

Comptroller  of  the  Currency  may  forthwith  appoint  a  receiver,  * 
and  require  of  him  such  bond  and  security  as  he  deems  proper. 
Such  receiver,  under  the  direction  of  the  Comptroller,  shall 
take  possession  of  the  books,  records,  and  assets  of  every 
description  of  such  association,  collect  all  debts,  dues,  and 
claims  belonging  to  it,  and,  upon  the  order  of  a  court  of  record 
of  competent  jurisdiction,  may  sell  or  compound  all  bad  or 
doubtful  debts,  and,  on  a  like  order,  may  sell  all  the  real  and 
personal  property  of  such  association,  on  such  terms  as  the 
court  shall  direct,  and  may,  if  necessary  to  pay  the  debts  of 
such  association,  enforce  the  individual  liability  of  the  stock- 
holders. Such  receiver  shall  pay  over  all  money  so  made  to 
the  Treasurer  of  the  United  States,  subject  to  the  order  of  the 
Comptroller,  and  also  make  report  to  the  Comptroller  of  all  his 
acts  and  proceedings. 

Kennedy  v.  Gibson,  8  Wall.,  498;  Bank  of  Bethel  v.  Pahquioque  Bank,  14  Wall., 
383  ;  Bank  v.  Kennedy,  1G  Wall.,  10  ;  in  re  Piatt,  receiver,  &c.,  1  Ben.,  534. 

In  addition  to  the  penalties  of  stoppage  of  business  and  forfeiture  of  bonds,  the 
Comptroller  may  in  addition  place  the  bank  in  the  hands  of  a  receiver.  A  receiver 
stands  in  the  same  relation  legally  to  a  bank  as  that  previously  occupied  by  the  board 
of  directors.  He  is  responsible  for  the  interests  of  the  corporation,  its  depositors, 
creditors,  and  stockholders.  He  is  under  the  direction  of  the  Comptroller  of  the 
Currency.  Appointed  by  that  officer,  he  can  be  removed  by  him.  He  acts  gener- 
ally under  orders  of  court  in  all  matters  outside  of  collection.  He  turns  over  all 
moneys  collected  to  the  Treasurer  of  the  United  States  subject  to  the  order  of  the 
Comptroller  of  the  Currency. 

114.  Advertisement  of  Comptroller  to  Creditors. 
Section  5235. — The  Comptroller  shall,  upon  appointing  a 
receiver,  cause  notice  to  be  given,  by  advertisement  in  such 
newspapers  as  he  may  direct,  for  three  consecutive  months, 
calling  on  all  persons  who  may  have  claims  against  such  asso- 
ciation to  present  the  same,  and  to  make  legal  proof  thereof. 

It  does  not,  however,  constitute  a  bar  to  a  just  claim  that  it  is  not  presented 
within  the  three  months.  Claims  may  be  so  plain  as  to  be  at  once  acknowledged 
by  the  receiver  and  Comptroller;  otherwise  they  must  be  established  by  judgment. 
A  claim  established  by  judgment  is  no  better  in  any  respect  than  one  allowed  by 
the  receiver  and  Comptroller. 

115.  Dividends  to  Creditors. 
Section  5236. — From  time  to  time,  after  full  provision  has 

*See  Section  1,  Act  of  June  30th,  1876,  page  101- 


68 

been  first  made  for  refunding  to  the  United  States  any  deficiency 
in  redeeming  the  notes  of  such  association,  the  Comptroller 
shall  make  a  ratable  dividend  of  the  money  so  paid  over  to  him 
by  such  receiver  on  all  such  claims  as  may  have  been  proved 
to  his  satisfaction  or  adjudicated  in  a  court  of  com petent  juris- 
diction, and,  as  the  proceeds  of  the  assets  of  such  association 
are  paid  over  to  him,  shall  make  further  dividends  on  all  claims 
previously  proved  or  adjudicated;  and  the  remainder  of  the  pro- 
ceeds, if  any,  shall  be  paid  over  to  the  shareholders  of  such 
association,  or  their  legal  representatives,  in  proportion  to  the 
stock  by  them  respectively  held. 

Bank  of  Bethel  v.  Pahquioque  Bank,  14  Wall.,  383. 

The  claimants  must  be  first  paid  in  full,  that  is,  including  interest.  When  claims 
are  allowed  all  interest,  if  the  subject  of  the  claim  bore  interest,  is  allowed  up  to 
the  date  of  the  suspension  of  the  bank,  when,  the  courts  have  decided,  demand  is 
technically  made.  The  claim  as  allowed  then  bears  interest  to  the  date  of  the  last 
payment,  and,  if  the  assets  are  sufficient,  dividends  to  claimants  must  continue  until 
interest  and  compound  interest  have  been  paid.  The  dividends  are  to  be  treated  as 
partial  payments  according  to  the  United  States  Supreme  Court  rule.  When  a  judg- 
ment is  obtained,  although  interest  up  to  date  of  decision  may  have  been  allowed  in 
the  judgment,  dividends  are  paid  only  on  the  principal  with  interest,  if  any,  up  to 
date  of  suspension  of  bank.  When  a  dividend  is  declared  by  the  Comptroller  it  is 
paid  on  all  proved  claims  and  reserved  on  all  claims  unproved  or  in  dispute,  and  as 
unproved  or  disputed  claims  are  either  proved  or  established  the  reserved  dividends 
are  paid  to  the  claimants. 

116.  Injunction  upon  Receivership. 
Section  5237. — Whenever  an  association  against  which  pro- 
ceedings have  been  instituted,  on  account  of  any  alleged  re- 
fusal to  redeem  its  circulating  notes  as  aforesaid,  denies  having 
failed  to  do  so,  it  may,  at  any  time  within  ten  days  after  it  has 
been  notified  of  the  appointment  of  an  agent,  as  provided  in 
section  fifty-two  hundred  and  twenty-seven,  apply  to  the  near- 
est circuit,  or  district,  or  territorial  court  of  the  United  States 
to  enjoin  further  proceedings  in  the  premises;  and  such  court, 
after  citing  the  Comptroller  of  the  Currency  to  show  cause 
why  further  proceedings  should  not  be  enjoined,  and  after  the 
decision  of  the  court  or  finding  of  a  jury  that  such  association 
has  not  refused  to  redeem  its  circulating  notes,  when  legally 
presented,  in  the  lawful  money  of  the  United  States,  shall 
make  an  order  enjoining  the  Comptroller,  and  any  receiver 


69 

acting  under  his  direction,  from  all  further  proceedings  on  ac- 
count of  such  alleged  refusal. 

See  Section  736.  page  84. 

This  section  gives  a  bank  opportunity  to  disprove  mistaken  charges,  and  a  method 
of  stopping  unwarranted  proceedings. 

117.  Receivership  Pees,  Expenses,  &c. 
Section  5238. — All  fees  for  protesting  the  notes  issued  by 
any  National  banking  association  shall  be  paid  by  the  person 
procuring  the  protest  to  be  made,  and  such  association  shall 
be  liable  therefor;  but  no  part  of  the  bonds  deposited  by  such 
association  shall  be  applied  to  the  payment  of  such  fees.  All 
expenses  of  any  preliminary  or  other  examinations  into  the 
condition  of  an}7  association  shall  be  paid  by  such  association. 
All  expenses  of  any  receivership  shall  be  paid  out  of  the  assets 
of  such  association  before  distribution  of  the  proceeds  thereof. 

Expenses  of  receivership  are  a  first  lien  upon  all  assets  except  bonds  to  secure 
circulation. 

118.  Violation  of  Title.  Penalty :  how  determined,  &c. 
Section  5239. — If  the  directors  of  any  National  banking 
association  shall  knowingly  violate,  or  knowingly  permit  any 
of  the  officers,  agents,  or  servants  of  the  association  to  violate 
any  of  the  provisions  of  this  Title,  all  the  rights,  privileges, 
and  franchises  of  the  association  shall  be  thereby  forfeited. 
Such  violation  shall,  however,  be  determined  and  adjudged  by 
a  proper  circuit,  district,  or  territorial  court  of  the  United 
States,  in  a  suit  brought  for  that  purpose  by  the  Comptroller  of 
the  Currency,  in  his  own  name,  before  the  association  shall  be 
declared  dissolved.  And  in  cases  of  such  violation,  every  di- 
rector who  participated  in  or  assented  to  the  same  shall  be  held 
liable  in  his  personal  and  individual  capacity  for  all  damages 
which  the  association,  its  shareholders,  or  any  other  person, 
shall  have  sustained  in  consequence  of  such  violation. 

Sections  5240  and  5241,  pages  57  and  58. 

This  section  contains  a  general  penalty  for  any  violation  of  the  banking  laws  of 
the  United  States,  and  is  held  to  apply  in  all  cases  where  there  is  no  special  penalty 
provided  for  a  particular  violation.  Thus  the  National  Bank  Act  provides  that  in 
case  of  default  in  payment  of  notes  a  receiver  may  be  appointed,  (see  Section  5234,) 
or,  if  a  National  bank  charges  usurious  interest,  such  interest  may  be  recovered. 
(Section  5198.)  The  penalty  for  neglect  to  make  reports  is  a  fine,  (Section  5213,) 
&c,  &c.  But  for  violations  of  many  other  sections  of  the  law  no  special  penalty  is  pro- 
vided.    Section  5239  covers  all  these  omissions.     It  applies  more  especially  to  solv- 


7^ 

ent  institutions  which  are  doing  business.  To  such  alone  could  the  franchises,  &c, 
be  of  any  value.  The  franchise  of  a  bank  that  has  become  insolvent  and  been 
placed  in  the  hands  of  a  receiver  is  of  little  or  no  value.  The  suit  must  be  brought 
by  the  Comptroller  to  forfeit  the  charter.  It  can  be  conceived  that  the  directors  of 
a  solvent  bank  might  engage  in  a  class  of  business  forbidden  by  the  National  Bank- 
ing Laws  ;  for  instance,  they  might  persist  in  loaning  directly  upon  real  estate 
security.  These  transactions  might  result  in  no  loss  to  the  bank,  or  to  any  one  con- 
nected with  or  dealing  with  it,  yet  the  Comptroller  might,  to  compel  obedience  to 
law,  bring  the  suit  mentioned  in  the  section,  and  the  charter  of  the  bank  might  be 
declared  forfeited.  One  can  conceive  that  the  stock  of  the  bank  might,  under  the 
circumstances,  decline  in  value  and  cause  loss  to  its  stockholders,  while  its  cus- 
tomers might  suffer  from  the  stoppage  of  business.  For  such  damages  the  directors, 
who  knowingly  consented  to  the  violation,  &c,  would  be  personally  liable.  The 
forfeiture  of  the  charter  is  one  consequence  of  the  violation  of  the  law  attended 
with  indirect  losses.  But  if  the  violation  itself  is  also  attended  with  direct  loss, 
distinct  from  that  growing  out  of  the  forfeiture,  the  directors  would  doubtless  be 
liable  under  the  section  for  this  loss  also.  It  might,  therefore  perhaps,  be  made  to 
apply  to  banks  which  became  insolvent  through  transactions  in  violation  of  law, 
which  the  directors  knowingly  carried  on,  but,  apparently,  only  after  a  suit  for  for- 
feiture of  charter  successfully  brought  by  the  Comptroller.  In  the  case  of  an  in- 
solvent bank  placed  in  the  hands  of  a  receiver,  it  has  been  found  much  better  in 
practice  not  to  bring  a  suit  against  the  directors  under  this  section,  as  they  can 
much  more  readily  be  made  liable  for  losses  which  have  occurred  through  their  mis- 
management in  a  suit  brought  against  them  in  equity  by  the  receiver  representing 
the  bank,  its  creditors,  and  stockholders.  For  many  other  reasons,  it  is  much  pref- 
erable to  retain  the  corporate  franchises  in  closing  up  banks  in  the  hands  of 
receivers. 

119.  Insolvent  Banks :  Transfers,  Assignments,  &e.,  void. 
Section  5242.* — All  transfers  of  the  notes,  bonds,  bills  of 
exchange,  or  other  evidences  of  debt  owing  to  any  National 
banking  association,  or  of  deposits  to  its  credit;  all  assignments 
of  mortgages,  sureties  on  real  estate,  or  of  judgments  or  de- 
crees in  its  favor;  all  deposits  of  money,  bullion,  or  other  val- 
uable thing  for  its  use,  or  for  the  use  of  any  of  its  shareholders 
or  creditors,  and  all  payments  of  money  to  either,  made  after 
the  commission  of  an  act  of  insolvency,  or  in  contemplation 
thereof,  made  with  a  view  to  prevent  the  application  of  its  as- 
sets in  the  manner  prescribed  by  this  chapter,  or  with  a  view 
to  the  preference  of  one  creditor  to  another,  except  in  payment 
of  its  circulating  notes,  shall  be  utterly  null  and  void. 

The  object  of  the  laws  placing  a  bank  in  the  hands  of  a  receiver,  and  controlling 
his  action,  is  to  secure  a  fair  pro  rata  distribution  of  such  assets  as  remain  when  the 

*For  part  of  Section  5242,  see  page  84,  under  head  of  -'Suits  and  Jurisdiction." 


7i 

bank  becomes  insolvent.  It  is  plain  that  a  bank  is  bankrupt  at  the  moment  that  it 
cannot  pay  legitimate  demands  upon  it  in  current  funds;  and  the  very  fact  that 
when  a  demand  is  made  a  bank  offers  something  other  than  current  funds,  would 
appear  to  be  presumptive  evidence  of  insolvency.  It  is  expected  from  the  very 
nature  of  the  business  that  a  bank  will  always  conduct  its  business  so  as  to  be  pre- 
pared to  meet  all  demands  by  immediate  payment  in  money.  In  practice,  however, 
it  is  often  very  difficult  to  determine  the  exact  date  of  the  insolvency,  inasmuch  as 
a  bank  may  be  really  insolvent  and  yet  be  able  to  meet  demands  to  some  small  extent 
in  current  funds,  and  it  may  be  able,  by  disposing  of  its  more  easily  liquidated  assets, 
such  as  bonds  or  the  best  of  its  bills  receivable,  to  supply  itself  with  current  funds 
to  meet  considerable  demands.  But  while  the  exact  moment  of  insolvency  is  ex- 
tremely difficult  to  fix  theoretically,  still  practically,  in  each  actual  case,  there 
comes  a  time  when  the  officers  are  aware  they  cannot  continue  business.  Usually, 
when  they  come  to  this  conclusion,  the  institution  closes  its  doors,  and  this  act  is 
the  act  of  insolvency  mentioned  in  the  section.  It  may,  however,  happen  that  a 
bank  closes  its  doors,  but  it  subsequently  appears,  by  competent  evidence,  that  for 
days,  weeks,  or  months  prior  to  the  actual  closure  the  officers  must  have  been 
aware  that  there  was  no  hope  for  the  institution,  and  they  are  not  excusable  because 
they  permitted  themselves  to  be  misled  by  false  hopes,  but  it  is  presumed  that  things 
appeared  to  them  as  they  would  appear  under  like  circumstances  to  competent  busi- 
ness men.  If  it  can  be  proved  that  after  the  institution  was  in  such  condition  that 
competent  bankers  would  have  closed  its  doors,  the  officers  paid  out  moneys,  &c. 
all  such  acts  would  be  null  and  void,  and  when  creditors  were  paid  in  other  than 
current  funds,  say  in  bills  receivable  or  other  unliquidated  assets,  such  creditors 
would  doubtless  be  considered  to  have  been  put  on  notice,  and  could  be  compelled 
to  refund  and  await  pro  rata  distribution. 

TAX  ON  UNAUTHORIZED  CIRCULATION. 

120.   Capital  of  State  Bank  converted  into  National  Bank. 

Section  3410. — The  capital  of  any  State  bank  or  banking 
association  which  has  ceased  or  shall  cease  to  exist,  or  which 
has  been  or  shall  be  converted  into  a  National  bank,  shall  be 
assumed  to  be  the  capital  as  it  existed  immediately  before  such 
bank  ceased  to  exist  or  was  converted  as  aforesaid. 

The  Act  of  March  3d.  1863,  repealed  laws  taxing  capital  of  both  State  and  Na- 
tional banks. 

121.  Circulation  :  When  Exempted  from  Tax. 
Section  341 1. — Whenever  the  outstanding  circulation  of 
any  bank,  association,  corporation,  company,  or  person  is  re- 
duced to  an  amount  not  exceeding  five  per  centum  of  the 
chartered  or  declared  capital  existing  at  the  time  the  same 
was  issued,  said  circulation  shall  be  free  from  taxation;  and 
whenever  any  bank  which  has  ceased  to  issue  notes  for  cir- 
culation deposits  in  the  Treasury  of  the  United  States,  in  law- 


72 

fill  money,  the  amount  of  its  outstanding  circulation,  to  be  re- 
deemed at  par,  under  such  regulations  as  the  Secretary  of  the 
Treasury  shall  prescribe,  it  shall  be  exempt  from  any  tax  upon 
such  circulation. 

See  Act  of  July  12th,  1882,  Sections  6  and  8,  pages  109.  111. 

This  section  refers  to  State  as  well  as  National  banks.  State  bank  circulation  has 
now  been  mostly  retired,  and  National  banks  ceasing  to  issue  circulation  generally 
deposit  lawful  money. 

122.  Tax  on  "Notes  of  State  Banks,  &c.,  used  for  Circulation. 
Section  3412. — Every  National  banking  association,  State 
bank,  or  State  banking  association  shall  pay  a  tax  of  ten  per 
centum  on  the  amount  of  notes  of  any  person,  or  of  any  State 
bank  or  State  banking  association,  used  for  circulation  and 
paid  out  by  them. 

See  Act  of  February  8th,  1875,  Sections  19  and  20,  pages  97. 

This  prevents  the  circulation  of  notes  issued  by  persons  or  State  banks. 

123.    Tax  on  Notes  of  Cities,  &e.,  used  for  Circulation. 
Section  3413. — Every  National  banking  association,  State 
bank  or  banker,  or  association  shall  pay  a  tax  of  ten  per  centum 
on  the  amount  of  notes  of  any  town,  city,  or  municipal  cor- 
poration paid  out  by  them. 

See  Act  of  February  8th,  1875,  Sections  19  and  20,  pages  97. 
This  section  is  intended  to  prevent  the  issue  of  notes  by  cities,  towns,  or  munic- 
ipal corporations. 

124.  Monthly  Returns  of  Notes  of  State  Banks,  Cities,  &c.,  Used. 
Section  3414. — A  true  and  complete  return  of  the  monthly 
amount  of  circulation,  of  deposits,  and  of  capital,  as  aforesaid, 
and  of  the  monthly  amount  of  notes  of  persons,  town,  city,  or 
municipal  corporation,  State  banks,  or  State  banking  associ- 
ations paid  out  as  aforesaid  for  the  previous  six  months,  shall 
be  made  and  rendered  in  duplicate  on  the  first  day  of  Decem- 
ber and  the  first  day  of  June,  by  each  of  such  banks,  associ- 
ations, corporations,  companies,  or  persons,  with  a  declaration 
annexed  thereto,  under  the  oath  of  such  person,  or  of  the  presi- 
dent or  cashier  of  such  bank,  association,  corporation,  or  com- 
pany, in  such  form  and  manner  as  may  be  prescribed  by  the 
Commissioner  of  Internal  Revenue,  that  the  same  contains  a 
true  and  faithful  statement  of  the  amounts  subject  to  tax,  as 
aforesaid ;  and  one  copy  shall  be  transmitted  to  the  collector 


73 

of  the  district  in  which  any  such  bank,  association,  corporation, 
or  company  is  situated,  or  in  which  such  person  has  his  place 
of  business,  and  one  copy  to  the  Commissioner  of  Internal 
Revenue. 

See  Act  of  February  8th,  1875,  Section  21,  page  97. 

It  is  believed  that  very  few  notes  of  the  description  mentioned  are  now  issued. 

125.  In  Default  of  Returns,  Commissioner  to  Estimate. 
Section  3415. — In  default  of  the  returns  provided  in  the 
preceding  section,  the  amount  of  circulation,  deposit,  capital, 
and  notes  of  persons,  town,  city,  and  municipal  corporations, 
State  banks,  and  State  banking  associations  paid  out,  as  afore- 
said, shall  be  estimated  by  the  Commissioner  of  Internal  Rev- 
enue, upon  the  best  information  he  can  obtain.  And  for  any 
refusal  or  neglect  to  make  return  and  payment,  any  such  bank, 
association,  corporation,  company,  or  person  so  in  default  shall 
pay  a  penalty  of  two  hundred  dollars,  besides  the  additional 
penalty  and  forfeitures  provided  in  other  cases. 

126.  Returns  for  Converted  State  Bank. 
Section  3416. — Whenever  any  State  bank  or  banking  asso- 
ciation has  been  converted  into  a  National  banking  association, 
and  such  National  banking  association  has  assumed  the  lia- 
bilities of  such  State  bank  or  banking  association,  including 
the  redemption  of  its  bills,  by  any  agreement  or  understanding 
whatever  with  the  representatives  of  such  State  bank  or  bank- 
ing association,  such  National  banking  association  shall  be 
held  to  make  the  required  return  and  payment  on  the  circu- 
lation outstanding,  so  long  as  such  circulation  shall  exceed 
five  per  centum  of  the  capital  before  such  conversion  of  such 
State  bank  or  banking  association. 

Probably  there  are  now  no  cases  under  this  section. 

127.   Provisions  for  Tax  on  Deposits,  Capital,  and  Circulation 
not  to  apply  to  National  Banks. 

Section  3417.  The  provisions  of  this  chapter,  relating  to 
the  tax  on  the  deposits,  capital,  and  circulation  of  banks,  and 
to  their  returns,  except  as  contained  in  sections  thirty-four 
hundred  and  ten,  thirty-four  hundred  and  eleven,  thirty-four 
hundred  and  twelve,  thirty-four  hundred  and  thirteen,  and 
thirty-four  hundred  and  sixteen,  and  such  parts  of  sections 


VOfA 


thirty-four  hundred  and  fourteen  and  thirty-four  hundred  and 
fifteen  as  relate  to  the  tax  of  ten  per  centum  on  certain  notes, 
shall  not  apply  to  associations  which  are  taxed  under  and  by 
virtue  of  Title  "National  Banks." 

See  Act  of  February  18th,  18T5,  correcting  Revised  Statutes,  page  97. 
Section  3418,  page  74. 

128.   United  States  Securities  Exempt  from  Local  Taxation. 
Section  3701. — All  stocks,  bonds,  Treasury  notes,  and  other 
obligations  of  the  United  States  shall  be  exempt  from  taxation 
by  or  under  State  or  municipal  or  local  authority.* 

Bank  v.  Supervisors,  7  Wall.,  26. 

National  bank  currency  is  defined  by  Section  5413  to  be  an  obligation  of  the 
United  States.  From  this  it  is  to  be  inferred  that  National  bank  notes  in  the  hands 
of  banks  or  individuals  are  exempt  from  State  or  municipal  or  local  authority. 
Section  5413,  however,  from  its  connection  with  the  laws  inflicting  penalties  for 
counterfeiting,  can  be  construed  to  make  National  bank  currency  an  obligation  of 
the  United  States  only  in  the  sense  that  it  is  to  be  protected  from  counterfeiting, 
&c,  in  the  same  manner  as  United  States  notes. 

This  is  the  view  taken  by  the  Supreme  Court  of  Indiana  in  the  case  of  Commis- 
sioners of  Montgomery  County  v.  Elston  (Thompson's  National  Bank  Cases,  425). 
The  judge  there  held  that  National  bank  notes  were  taxable.  The  Supreme  Court 
of  Mississippi,  however,  in  Home  v.  Green,  (Thompson's  National  Bank  Cases,  643,) 
held  that  under  Section  5413  National  bank  notes  are  obligations  of  the  United 
States,  and  as  such  not  subject  to  State,  municipal,  or  local  taxation.  The  question 
is  therefore  still  an  open  one,  never  having  been  decided  in  the  United  States  Su- 
preme Court. 

CHAPTER  VII. 
STAMP  TAX  ON  BANK  CHECKS. 


129.  Tax  on  Bank  Checks. 
Section  3418. — There  shall  be  levied,  collected,  and  paid 
for  and  in  respect  of  every  bank  check,  draft,  or  order  for  the 
payment  of  money,  drawn  upon  any  bank,  banker,  or  trust 
company,  at  sight  or  on  demand,  by  any  person  who  makes, 
signs,  or  issues  the  same,  or  for  whose  use  or  benefit  the  same 
is  made,  signed  or  issued,  two  cents. 

See  Act  of  February  8th,  1875,  Section  15,  page  96. 
Obsolete. 

♦See  also  in  this  connection  Section  5413  on  page  78. 


75 

130.  Official  Checks  Exempt  from  Tax. 
Section  3420. — All  bank  checks,  drafts,  or  orders,  as  afore- 
said, issued  by  the  officers  of  the  United  States  Government,  or 
by  officers  of  any  State,  county,  town,  or  other  municipal  cor- 
poration, are  exempt  from  taxation :  Provided,  That  it  is  the 
intent  hereby  to  exempt  from  liability  to  taxation  such  State, 
county,  town,  or  other  municipal  corporations  in  the  exercise 
only  of  functions  strictly  belonging  to  them  in  their  ordinary 
governmental  and  municipal  capacity. 

131.  Unstamped  Checks  not  Admissible  in  Evidence. 
Section  3421. — No  bank  check,  draft,  or  order,  required 
by  law  to  be  stamped,  which  is  issued  without  being  duly 
stamped,  nor  any  copy  thereof,  shall  be  admitted  or  used  in 
evidence  in  any  court  until  a  legal  stamp,  denoting  the  amount 
of  tax,  is  affixed  thereto,  as  prescribed  by  law.  * 

Obsolete. 

132.  Unstamped  Checks,  &c. ;  Penalty ;  How  made  Valid. 
Section  3422. — Any  person  or  persons  who  shall  make, 
sign,  or  issue,  or  who  shall  cause  to  be  made,  signed,  or  issued, 
any  instrument,  document,  or  paper  of  any  kind  or  description 
whatsoever,  or  shall  accept,  negotiate,  or  pay,  or  cause  to  be 
accepted,  negotiated,  or  paid,  any  draft,  or  order,  for  the  pay- 
ment of  money,  without  the  same  being  duly  stamped,  or 
having  thereupon  an  adhesive  stamp  for  denoting  the  tax 
chargeable  thereon,  and  canceled  in  the  manner  required  by 
law,  with  intent  to  evade  the  provisions  of  this  Title,  shall, 
for  every  such  offense,  forfeit  the  sum  of  fifty  dollars,  and  such 
instrument,  document,  or  paper,  draft,  [or]  order,  not  being 
stamped  according  to  law,  shall  be  deemed  invalid  and  of  no 
effect:  Provided,  That  hereafter,  in  all  cases  where  the  party 
has  not  affixed  to  any  instrument  the  stamp  required  by  law 
thereon,  at  the  time  of  making  or  issuing  the  said  instrument, 
and  he  or  they,  or  any  party  having  an  interest  therein,  shall 
be  subsequently  desirous  of  affixing  such  stamp  to  said  instru- 
ment, or,  if  said  instrument  be  lost,  to  a  copy  thereof,  he  or 
they  shall  appear  before  the  collector  of  the  revenue  of  the 

*See  also,  in  this  connection,  Section  5413,  on  page  78. 


76 

proper  district,  who  shall,  upon  the  payment  of  the  price  of 
the  proper  stamp  required  by  law,  and  of  a  penalty  of  double 
the  amount  of  tax  remaining  unpaid,  but  in  no  case  less  than 
five  dollars,  and  where  the  whole  amount  of  the  tax  denoted 
by  the  stamp  required  shall  exceed  the  sum  of  fifty  dollars,  on 
payment  also  of  interest,  at  the  rate  of  six  per  centum  on  said 
tax  from  the  day  on  which  such  stamp  ought  to  have  been 
affixed,  affix  the  proper  stamp  to  such  instrument  or  copy,  and 
note  upon  the  margin  thereof  the  date  of  his  so  doing,  and  the 
fact  that  such  penalty  has  been  paid;  and  the  same  shall  there- 
upon be  deemed  and  held  to  be  as  valid,  to  all  intents  and 
purposes,  as  if  stamped  when  made  or  issued.     *     *     * 

133.  Stamps  to  be  Canceled;  Penalty  for  Fraudulent  Use. 

Section  3423. — In  all  cases  where  an  adhesive  stamp  is 
used  for  denoting  any  tax  imposed  under  this  chapter,  except 
as  hereinafter  provided,  the  person  using  or  affixing  the  same 
shall  write  thereon  the  initials  of  his  name  and  the  date  on 
which  such  stamp  is  attached  or  used,  so  that  it  may  not  again 
be  used.  And  every  person  who  fraudulently  makes  use  of  an 
adhesive  stamp  to  denote  any  tax  imposed  by  this  chapter 
without  so  effectually  cancelling  and  obliterating  such  stamp, 
•except  as  before  mentioned,  shall  forfeit  the  sum  of  fifty  dol- 
lars.    *     *     * 

134.  Method  of  Cancellation. 

Section  3424. — The  Commissioner  of  Internal  Revenue  is 
authorized  to  prescribe  such  method  for  the  cancellation  of 
stamps  as  substitute  for,  or  in  addition  to  the  method  pre- 
scribed in  this  chapter,  as  he  may  deem  expedient  and  ef- 
fectual.    *     *     * 

CHAPTER  Yin. 
CRIMES  AND   MISDEMEANORS. 


135.  Penalty  for  Unlawfully  Countersigning  Notes. 
Section  5187. — No  officer  acting  under  the  provisions  of 
this  Title  shall  countersign  or  deliver  to  any  association,  or  to 


77 

any  other  company  or  person,  any  circulating  notes  contem- 
plated by  this  Title,  except  in  accordance  with  the  true  intent 
and  meaning  of  its  provisions.  Every  officer  who  violates  this 
section  shall  be  deemed  guilty  of  a  high  misdemeanor,  and 
shall  be  fined  not  more  than  double  the  amount  so  counter- 
signed and  delivered,  and  imprisoned  not  less  than  one  year 
and  not  more  than  fifteen  years. 

This  applies  to  officers  of  the  Government.  No  cases  have  arisen  under  it  since 
the  National  banking  law  went  into  force. 

136.  U.  S.  or  National  Bank  Notes  as  Security;  Penalty. 
Section  5207. — No  association  shall  hereafter  offer  or  re- 
ceive United  States  notes  or  National  bank  notes  as  security 
or  as  collateral  security  for  any  loan  of  money,  or  for  a  con- 
sideration agree  to  withhold  the  same  from  use,  or  offer  or  receive 
the  custody  or  promise  of  custody  of  such  notes  as  security,  or 
as  collateral  security,  or  consideration  for  any  loan  of  money. 
Any  association  offending  against  the  provisions  of  this  section 
shall  be  deemed  guilty  of  a  misdemeanor,  and  shall  be  fined 
not  more  than  one  thousand  dollars  and  a  further  sum  equal 
to  one-third  of  the  money  so  loaned.  The  officer  or  officers  of 
any  association  who  shall  make  any  such  loan  shall  be  liable 
for  a  further  sum  equal  to  one-quarter  of  the  money  loaned ; 
and  any  fine  or  penalty  incurred  by  a  violation  of  this  section 
shall  be  recoverable  for  the  benefit  of  the  party  bringing  such 
suit. 

This  was  designed  to  prevent  the  locking  up  of  money.  It  was  aimed  at  a  favorite 
method  of  accomplishing  this  at  one  time  put  in  practice  in  New  York  city,  and 
perhaps  elsewhere. 

137.  Penalty  for  Embezzlement. 
Section  5209. — Every  president,  director,  cashier,  teller, 
clerk,  or  agent  of  any  association,  who  embezzles,  abstracts, 
or  wilfully  misapplies  any  of  the  moneys,  funds,  or  credits  of 
the  association  ;  or  who,  without  authority  from  the  directors, 
issues  or  puts  in  circulation  any  of  the  notes  of  the  association  ; 
or  who,  without  such  authority,  issues  or  puts  forth  any  cer- 
tificate of  deposit,  draws  any  order  or  bill  of  exchange,  makes 
any  acceptance,  assigns  any  note,  bond,  draft,  bill  of  exchange, 
mortgage,  judgment,  or  decree  ;  or  who  makes  any  false  entry 
in  any  book,  report,  or  statement  of  the  association,  with  intent,. 


78 

in  either  case,  to  injure  or  defraud  the  association  or  any  other 
company,  body  politic  or  corporate,  or  any  individual  person, 
or  to  deceive  any  officer  of  the  association,  or  any  agent  ap- 
pointed to  examine  the  affairs  of  any  such  association  ;  and 
every  person  who  with  like  intent  aids  or  abets  any  officer, 
clerk,  or  agent  in  any  violation  of  this  section,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  shall  be  imprisoned  not  less  than 
five  years  nor  more  than  ten. 

138.  Obligations  of  the  United  States  Defined. 
Section  5413. — The  words  "obligation  or  other  security 
of  the  United  States ' '  shall  be  held  to  mean  all  bonds,  certifi- 
cates of  indebtedness,  National  bank  currency,  coupons,  United 
States  notes,  Treasury  notes,  fractional  notes,  certificates  of 
deposit,  bills,  checks,  or  drafts  for  money,  drawn  by  or  upon 
authorized  officers  of  the  United  States,  stamps  and  other  rep- 
resentatives of  value,  of  whatever  denomination,  which  have 
been  or  may  [be]  issued  under  any  Act  of  Congress. 

See  Act  of  February  18th,  1875,  page  97,  correcting  Revised  Statutes. 

139.  Penalty  for  Counterfeiting  National  Bank  Notes. 
Section  5415. — Every  person  who  falsely  makes,  forges,  or 
counterfeits,  or  causes  or  procures  to  be  made,  forged,  or  coun- 
terfeited, or  willingly  aids  or  assists  in  falsely  making,  forging, 
or  counterfeiting,  any  note  in  imitation  of,  or  purporting  to 
be  in  imitation  of,  the  circulating  notes,  issued  by  any  bank- 
ing association  now  or  hereafter  authorized  and  acting  under 
the  laws  of  the  United  States ;  or  who  passes,  utters,  or  pub- 
lishes, or  attempts  to  pass,  utter,  or  publish,  any  false,  forged, 
or  counterfeited  note,  purporting  to  be  issued  by  any  such  as- 
sociation doing  a  banking  business,  knowing  the  same  to  be 
falsely  made,  forged,  or  counterfeited,  or  who  falsely  alters,  or 
causes  or  procures  to  be  falsely  altered,  or  willingly  aids  or 
assists  in  falsely  altering  any  such  circulating  notes,  or  passes, 
utters,  or  publishes,  or  attempts  to  pass,  utter,  or  publish  as 
true,  any  falsely  altered  or  spurious  circulating  note  issued,  or 
purporting  to  have  been  issued,  by  any  such  banking  associa- 
tion, knowing  the  same  to  be  falsely  altered  or  spurious,  shall 
be  imprisoned  at  hard  labor  not  less  than  five  years  nor  more 


79 

than  fifteen  years,  and  fined  not  more  than  one  thousand  dol- 
lars. 

140.  Penalty  for  using  Plates,  False  Plates,  Notes.  &c. 
Section  5430. — Every  person  having  control,  custody,  or 
possession  of  any  plate,  or  any  part  thereof,  from  which  has 
been  printed,  or  which  may  be  prepared  by  direction  of  the 
Secretary  of  the  Treasury  for  the  purpose  of  printing,  any  ob- 
ligation or  other  security  of  the  United  States,  who  uses  such 
plate,  or  knowingly  suffers  the  same  to  be  used  for  the  purpose 
of  printing  any  such  or  similar  obligation,  or  other  security, 
or  any  part  thereof,  except  as  may  be  printed  for  the  use  of 
the  United  States  by  order  of  the  proper  officer  thereof ;  and 
every  person  who  engraves,  or  causes  or  procures  to  be  en- 
graved, or  assists  in  engraving,  any  plate  in  the  likeness  of  any 
plate  designed  for  the  printing  of  such  obligation  or  other  se- 
curity, or  who  sells  any  such  plate,  or  who  brings  into  the 
United  States  from  any  foreign  place  any  such  plate,  except 
under  the  direction  of  the  Secretary  of  the  Treasury  or  other 
proper  officer,  or  with  any  other  intent,  in  either  case,  than 
that  such  plate  be  used  for  the  printiug  of  the  obligations  or 
other  securities  of  the  United  States  ;  or  who  has  in  his  control, 
custody,  or  possession  any  metallic  plate  engraved  after  the 
similitude  of  any  plate  from  which  any  such  obligation  or 
other  security  has  been  printed,  with  intent  to  use  such  plate, 
or  suffer  the  same  to  be  used  in  forging  or  counterfeiting  any 
such  obligation  or  other  security,  or  any  part  thereof;  or  who 
has  in  his  possession  or  custody,  except  under  authority  from 
the  Secretary  of  the  Treasury  or  other  proper  officer,  any  obli- 
gation or  other  security,  engraved  and  printed  after  the  simili- 
tude of  any  obligation  or  other  security  issued  under  the  au- 
thority of  the  United  States,  with  intent  to  sell  or  otherwise 
use  the  same ;  and  every  person  who  prints,  photographs,  or 
in  any  other  manner  makes  or  executes,  or  causes  to  be  printed, 
photographed,  made,  or  executed,  or  aids  in  printing,  photo- 
graphing, making,  or  executing  any  engraving,  photograph, 
print,  or  impression  in  the  likeness  of  any  such  obligation  or 
other  security,  or  any  part  thereof,  or  who  sells  any  such  en- 
graving, photograph,  print,  or  impression,  except  to  the  United 


8o 

States,  or  who  brings  into  the  United  States  from  any  foreign 
place  any  such  engraving,  photograph,  print,  or  impression, 
except  by  direction  of  some  proper  officer  of  the  United  States, 
or  who  has  or  retains  in  his  control  or  possession,  after  a  dis- 
tinctive paper  has  been  adopted  by  the  Secretary  of  the  Treas- 
ury for  the  obligations  and  other  securities  of  the  United 
States,  any  similar  paper  adapted  to  the  making  of  any  such 
obligation  or  other  security,  except  under  the  authority  of  the 
Secretary  of  the  Treasury  or  some  other  proper  officer  of  the 
United  States,  shall  be  punished  by  a  fine  of  not  more  than 
five  thousand  dollars,  or  by  imprisonment  at  hard  labor  not 
more  than  fifteen  years,  or  by  both. 

141.  Penalty  for  Passing,  Selling,  &c.,  Counterfeits. 
Section  5431. — Every  person  who,  with  intent  to  defraud^ 
passes,  utters,  publishes,  or  sells,  or  attempts  to  pass,  utter, 
publish,  or  sell,  or  brings  into  the  United  States  with  intent 
to  pass,  publish,  utter,  or  sell,  or  keeps  in  possession  or  con- 
ceals with  like  intent  any  falsely  made,  forged,  counterfeited, 
or  altered  obligation,  or  other  security  of  the  United  States, 
shall  be  punished  by  a  fine  of  not  more  than  five  thousand 
dollars,  and  by  imprisonment  at  hard  labor  not  more  than  fif- 
teen years. 

142.  Penalty  for  Taking  Impressions  of  Implements,  &e. 

Section  5432. — Every  person  who,  without  authority  from 
the  United  States,  takes,  procures,  or  makes,  upon  lead,  foil, 
wax,  plaster,  paper,  or  any  other  substance  or  material,  an 
impression,  stamp,  or  imprint  of,  from,  or  by  the  use  of  any 
bed-plate,  bed-piece,  die,  roll,  plate,  seal,  type,  or  other  tool, 
implement,  instrument,  or  thing  used  or  fitted  or  intended  to 
be  used,  in  printing,  stamping,  or  impressing,  or  in  making 
other  tools,  implements,  instruments,  or  things,  to  be  used,  or 
fitted,  or  intended  to  be  used,  in  printing,  stamping,  or  im- 
pressing any  kind  or  description  of  obligation  or  other  security 
of  the  United  States,  now  authorized  or  hereafter  to  be  author- 
ized by  the  United  States,  or  circulating  note  or  evidence  of 
debt  of  any  banking  association  under  the  laws  thereof,  shall 
be  punished  by  imprisonment  at  hard  labor  not  more  than  ten 


8i 

years,  or  by  a  fine  of  not  more  than  five  thousand  dollars,  or 
both. 

143.  Penalty  for  Having  Impression  of  Implements,  &e. 
Section  5433. — Every  person  who,  with  intent  to  defraud, 
has  in  his  possession,  keeping,  custody,  or  control,  without 
authority  from  the  United  States,  any  imprint,  stamp,  or  im- 
pression, taken  or  made  upon  any  substance  or  material  what- 
soever, of  any  tool,  implement,  instrument,  or  thing,  used  or 
fitted,  or  intended  to  be  used,  for  any  of  the  purposes  men- 
tioned in  the  preceding  section  ;  or  who,  with  intent  to  defraud, 
sells,  gives,  or  delivers  any  such  imprint,  stamp,  or  impression 
to  any  other  person,  shall  be  punished  by  imprisonment  at 
hard  labor  not  more  than  ten  years,  or  by  a  fine  of  not  more 
than  five  thousand  dollars. 

144.  Penalty  for  Buying  or  Selling  Counterfeits,  &c. 
Section  5434. — Every  person  who  buys,  sells,  exchanges, 
transfers,  receives,  or  delivers,  any  false,  forged,  counterfeited, 
or  altered  obligation  or  other  security  of  the  United  States,  or 
circulating  note  of  any  banking  association  organized  or  act- 
ing under  the  laws  thereof,  which  has  been  or  may  hereafter 
be  issued  by  virtue  of  any  act  of  Congress,  with  the  intent  that 
the  same  be  passed,  published,  or  used  as  true  and  genuine, 
shall  be  imprisoned  at  hard  labor  not  more  than  ten  years,  or 
fined  not  more  than  five  thousand  dollars,  or  both. 

145.  Penalty  for  Officers  Using  Notes,  &c.,  of  Closed  Banks. 
Section  5437. — In  all  cases  where  the  charter  of  any  cor- 
poration which  has  been  or  may  be  created  by  Act  of  Congress 
has  expired  or  may  hereafter  expire,  if  any  director,  officer,  or 
agent  of  the  corporation,  or  any  trustee  thereof,  or  any  agent 
of  such  trustee,  or  any  person  having  in  his  possession  or 
under  his  control  the  property  of  the  corporation  for  the  pur- 
pose of  paying  or  redeeming  its  notes  and  obligations,  know- 
ingly issues,  reissues,  or  utters  as  money,  or  in  any  other  way 
knowingly  puts  in  circulation  any  bill,  note,  check,  draft,  or 
other  security  purporting  to  have  been  made  by  any  such  cor- 
poration whose  charter  has  expired,  or  by  any  officer  thereof, 
or  purporting  to  have  been  made  under  authority  derived  there- 
6 


82 

from,  or  if  any  person  knowingly  aids  in  any  such  act,  he 
shall  be  punished  by  a  fine  of  not  more  than  ten  thousand 
dollars,  or  by  imprisonment  not  less  than  one  year  nor  more 
than  five  years,  or  by  both  such  fine  and  imprisonment.  But 
nothing  herein  shall  be  construed  to  make  it  unlawful  for  any 
person,  not  being  such  director,  officer,  or  agent  of  the  cor- 
poration, or  any  trustee  thereof,  or  any  agent  of  such  trustee, 
or  any  person  having  in  his  possession  or  under  his  control  the 
property  of  the  corporation  for  the  purpose  hereinbefore  set 
forth,  who  has  received  or  may  hereafter  receive  such  bill,  note, 
check,  draft,  or  other  security,  bona  fide  and  in  the  ordinary 
transactions  of  business,  to  utter  as  money  or  otherwise  circu- 
late the  same. 

This  section  was  an  Act  originally  passed  in  1837  to  apply  to  the  second  Bank  of 
the  United  States,  the  charter  of  which  had  then  just  expired.  For  some  reason  or 
other  the  compilers  embodied  this  old  Act  in  the  Revised  Statutes. 

146.  Receiving  Public  Moneys  unless  Depositary;  Penalty. 

Section  5497. — Every  banker,  broker,  or  other  person  not 
an  authorized  depositary  of  public  moneys,  who  knowingly 
receives  from  any  disbursing  officer,  or  collector  of  internal 
revenue,  or  other  agent  of  the  United  States,  any  public  money 
on  deposit,  or  by  way  of  loan  or  accommodation,  with  or  with- 
out interest,  or  otherwise  than  in  payment  of  a  debt  against 
the  United  States,  or  who  uses,  transfers,  converts,  appropri- 
ates, or  applies  any  portion  of  the  public  money  for  any  pur- 
pose not  prescribed  by  law,  and  every  president,  cashier,  teller, 
director,  or  other  officer  of  any  bank  or  banking  association, 
who  violates  any  of  the  provisions  of  this  section,  is  guilty  of 
an  act  of  embezzlement  of  the  public  money  so  deposited, 
loaned,  transferred,  used,  converted,  appropriated,  or  applied, 
and  shall  be  punished  as  prescribed  in  section  fifty-four  hun- 
dred and  eighty-eight. 

See  Sections  3639  and  3651  of  U.  S.  Revised  Statutes. 

It  will  be  seen  from  this  section  that  all  banks  other  than  public  depositaries  arc 
put  on  notice  in  regard  to  dealings  with  disbursing  officers,  &c,  of  the  United 
States.  If  the  provisions  of  this  section  are  violated,  such  violation  constitutes 
embezzlement.  Sections  3639  and  3651  of  the  Revised  Statutes  are  also  of  impor- 
tance to  bankers.     They  have  reference  to  public  moneys. 


§3 


CHAPTER   IX. 
*  SUITS,   JURISDICTION,  AND    EVIDENCE. 


147.  National  Bank  Suits  in  Jurisdiction  of  District  Courts. 
Section  563. — The  District  Courts  shall  have  jurisdiction  as 
follows: 

$  J|e  #  s|c  j|e  s|c  :|i 

Fifteenth.  Of  all  suits  by  or  against  any  association  estab- 
lished under  any  law  providing-  for  National  banking  associa- 
tions within  the  district  for  which  the  court  is  held. 

Kennedy  v.  Gibson,  8  Wall.,  506. 

The  general  subject  of  jurisdiction  will  be  treated  at  length  at  the  close  of  Section 
380,  page  84. 

148.  National  Banks;  Suits  in  Circuit  Courts;  to  Enjoin 

Comptroller,  &c. 

Section  629. — The  Circuit  Courts  shall  have  original  juris- 
diction as  follows: 

Tenth.  Of  all  suits  by  or  against  any  banking  association 
established  in  the  district  for  which  the  court  is  held,  under 
any  law  providing  for  National  banking  associations,  f 

Eleventh.  Of  all  suits  brought  by  any  banking  association 
established  in  the  district  for  which  the  court  is  held,  under 
the  provisions  of  Title  "The  National  Banks,"  to  enjoin 
the  Comptroller  of  the  Currency,  or  any  receiver  acting  under 
his  direction,  as  provided  by  said  Title. X 

149.  Exclusive  Jurisdiction  of  U.  S.  Courts  in  Suits  for 

Penalties,  &c. 

Section  711. — The  jurisdiction  vested  in  the  courts  of  the 

*  Jurisdiction  of  courts  amended  by  proviso  in  Section  4  of  Act  of  July  12th,  1882, 
page  108. 

f  Kennedy  v.  Gibson,  8  Wall.,  506. 

J  See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  97. 


84 

United  States,  in  the  cases  and  proceedings  hereinafter  men- 
tioned, shall  be  exclusive  of  the  courts  of  the  several  States: 

*  *  *  *  *  *  * 

Second.   Of  all  suits  for  penalties  and  forfeitures  incurred 
under  the  laws  of  the  United  States. 

*  *  *  ^  ^  *  ;fc 

150.  In  what  Courts  Suits  may  be  Brought. 
Section  5198.* — Suits,  actions,  and  proceedings  against 
any  association  under  this  Title  may  be  had  in  any  circuit, 
district,  or  territorial  court  of  the  United  States  held  within 
the  district  in  which  such  association  may  be  established,  or 
in  any  State,  county,  or  municipal  court  in  the  county  or  city 
in  which  said  association  is  located,  having  jurisdiction  in 
similar  cases. 

See  Act  of  February  18th,  1875,  correcting  Revised  Statutes,  page  97. 

151.    No  Attachment  before  Final  Judgment  in  State  Court. 
Section  5242.* — No  attachment,  injunction,  or  execution 
shall  be  issued  against  such  association  or  its  property  before 
final  judgment  in  any  suit,  action,  or  proceeding,  in  any  State, 
county,  or  municipal  court. 

152.  Proceedings  to  Enjoin  Comptroller,  where  had. 
Section  736. — All  proceedings  by  any  National  banking 
association  to  enjoin  the  Comptroller  of  the  Currency,  under 
the  provisions  of  any  law  relating  to  National  banking  associ- 
ations, shall  be  had  in  the  district  where  such  association  is 
located. 

See  Section  5237,  page  68. 

153.  United  States  District  Attorney  to  Conduct  Suits. 
Section  380. — All  suits  and  proceedings  arising  out  of  the 
provisions  of  law  governing  National  banking  associations,  in 
which  the  United  States  or  any  of  its  officers  or  agents  shall 
be  parties,  shall  be  conducted  by  the  district  attorneys  of  the 
several  districts  under  the  direction  and  supervision  of  the 
Solicitor  of  the  Treasury. 

Jurisdiction. — In  the  original  Act  of  February  25th,  1863,  the  only  provisions  in 
regard  to  suits  brought  by  or  against  National  banks  were  contained  in  Sections 
11,  29,  55,  and  59.     Section  11  provided  that  National  banking  associations  may 

*For  parts  of  Sections  5198  and  5242,  see  also  pages  43  and  70. 


sue  and  be  sued,  complain  and  defend  in  any  court  of  law  or  equity  as  fully  as 
natural  persons. 

Section  29  provided  that  where  proceedings  against  any  association  had  been 
commenced  by  the  Comptroller,  on  account  of  failure  to  redeem  its  circulating  notes, 
such  association  may  apply  to  the  nearest  circuit  or  district  or  territorial  court  of 
the  United  States  to  enjoin  further  proceedings.  Section  55  was  the  same  as  Sec- 
tion 360  of  the  Revised  Statutes,  (above.) 

Section  59  provided  that  suits,  actions,  and  proceedings  by  or  against  any  associ- 
ation may  be  had  in  any  circuit,  district,  or  territorial  court  of  the  United  States, 
held  within  the  district  in  which  such  association  may  be  established. 

The  original  Act,  therefore,  placed  National  banks  on  the  same  footing  as  natural 
persons  before  all  courts,  and  in  addition  gave  them  the  right  to  sue  and  be  sued  in 
the  United  States  courts  of  their  several  districts,  even  where  such  actions  might  not 
otherwise  be  under  the  jurisdiction  of  those  courts. 

The  Act  of  June  3d,  18G4,  superseded  the  Act  of  February  25th,  1863. 

Section  8  embodied  Section  11  of  previous  Act.  Section  50  repeats  Section  29  of 
the  original  law,  and  Section  56  continues  Section  55. 

Section  57,  which  takes  the  place  of  Section  59  of  the  older  Act,  reads  as  follows  : 

••  That  suits,  actions,  and  proceedings  against  any  association  under  this  Act  may 
be  had  in  any  circuit,  district,  or  territorial  court  of  the  United  States  held  within 
the  district  in  which  such  association  may  be  established;  or  in  any  State,  county, 
or  municipal  court  in  the  county  or  city  in  which  said  association  is  located,  having 
jurisdiction  in  similar  cases :  Provided,  That  all  proceedings  to  enjoin  the  Comp- 
troller under  this  Act  shall  be  had  in  a  circuit,  district,  or  territorial  court  of  the 
United  States  held  in  the  district  in  which  the  association  is  located.'' 

The  proviso  is  to  prevent  conflict  with  Section  50.  The  object  in  enlarging  the 
terms  of  the  previous  law  in  Section  57  appears  to  have  been  to  avoid  the  danger 
that  the  law  as  it  previously  stood  might  be  construed  to  confine  National  banks  to 
the  United  States  courts,  notwithstanding  the  provisions  of  Section  8,  which  would 
have  been  exceedingly  inconvenient,  both  to  the  National  banks  and  their  opponents. 
The  United  States  Supreme  Court  in  Kennedy  v.  Gibson,  8  Wall.,  498,  held  that  the 
word  "by  "was  accidentally  omitted  from  Section  57,  and  that  it  should  read 
'•  suits,  actions,  and  proceedings  by  and  against"  associations.  The  section  restricts 
suits,  &c,  to  the  district,  city,  or  county  where  the  bank  is  located.  (See  Manu- 
facturers' National  Bank  v.  Black,  2  Abb.  U.  S.,  232.)  The  court  held  that  a 
National  bank  located  in  one  State  could  bring  an  action  in  the  Circuit  Court  sitting 
within  another  State  against  a  citizen  thereof. 

In  the  United  States  Revised  Statutes  the  provisions  of  Sections  8,  50,  50,  and  57 
of  the  Act  of  June  3d,  1864,  are  embodied  with  other  matter  not  relating  to  National 
banks  in  Sections  563,  629,  5198,  736,  and  380.  Sections  563  and  629  establish  the 
jurisdiction  of  the  United  States  Circuit  and  District  Courts  over  suits  brought  by 
or  against  any  National  banking  association  located  in  the  district  for  which  the 
court  is  held.  The  provisions  of  Section  8  are  repeated  in  the  fourth  clause  of 
Section  5136,  page  7,  which  see.  Sections  629  and  736  establish  the  jurisdiction 
of  United  States  Circuit  Courts  over  actions  to  enjoin  the  Comptroller,  but  such 
action  must  be  had  in  the  district  where  the  bank  is  located.  Section  5198,  how- 
ever, while  repeating  the  provision  giving  United  States  Circuit  and  District  Courts 
jurisdiction  over  suits  against  National  banks  located  in  their  several  districts,  also 
provides  that  suits  against  (omitting  "  by  ")  National  banks  may  be  brought  in  any 


86 

State,  county,  or  municipal  court  in  the  county  or  city  in  which  the  bank  is  located, 
having  jurisdiction  in  similar  cases.  Under  this  revision  of  the  statutes,  National 
banks  could  apparently  bring  suits  in  the  United  States  courts  only,  They  could, 
however,  be  sued  in  appropriate  cases  in  the  State,  county,  and  municipal  courts. 
A  proviso  attached  to  Section  4  of  the  Act  of  July  12th,  1882,  makes  the  jurisdiction 
in  all  suits  by  or  against  National  banks,  except  suits  between  them  and  the  United 
States,  the  same  as  the  jurisdiction  for  suits  by  or  against  banks  other  than  National 
banks,  which  do  or  might  do  business  where  such  National  banks  may  be  doing 
business  when  such  suits  are  begun.  This  proviso1  also  repeals  all  laws  and  parts 
of  laws  inconsistent  with  itself.  This  places  National  banks  on  the  same  general 
footing  as  other  banking  corporations.  They  no  longer  are  compelled  to  sue  in  the 
United  States  courts,  nor  can  they  sue  in  those  courts  merely  in  virtue  of  their  cor- 
porate rights.  But  National  banks,  like  other  banks  and  citizens,  may  sue  in  such 
courts  whenever  the  subject-matter  of  litigation  involves  some  matter  of  Federal 
jurisdiction.  (Union  National  Bank  v.  Miller,  C.  C.  S.  D.  Ohio,  Fed.  Rep.,  Vol. 
XV,  1703.)  Under  this  decision  the  United  States  courts  would  evidently  take 
jurisdiction  in  any  matter  involving  a  Federal  law. 

Section  5242,  as  to  attachments  before  judgment  in  State  courts,  is  probably  not 
affected  by  the  proviso  to  Section  4  of  the  Act  of  July  12th,  1882,  nor  is  Section  380. 

The  following  cases  bear  on  the  question,  and  will  repay  investigation,  although 
most  of  them  were  decided  prior  to  passage  of  Act  of  July  12th,  1882  : 

Pettilon  v.  Noble,  Thompson's  National  Bank  Cases,  120,  U.  S.  C.  C.  A  State 
court  cannot  enforce  the  removal  of  a  cause  to  the  Federal  court  on  the  ground  of 
exclusive  jurisdiction. 

Mitchell  v.  Walker,  Thompson,  180,  U.  S.  C.  C.  A  Federal  court  has  uncondi- 
tional jurisdiction  of  all  suits  to  which  a  National  bank  is  a  party,  irrespective  of 
amount  or  citizenship. 

Shoemaker  v.  National  Mechanics'  Bank,  2  Abb.  U.  S.,  416;  Missouri  River  Tele- 
graph Company  v.  First  National  Bank  of  Sioux  City,  74  Ills.,  217.  The  courts  of 
one  State  have  no  jurisdiction  in  an  action  against  a  National  bank  located  in 
another  State  to  recover  the  penalty  imposed  by  Act  of  Congress  for  taking  unlawful 
interest. 

Newell  v.  National  Bank  of  Somerset,  12  Bush.,  57  ;  Ordway  v.  Central  National 
Bank,  Thompson's  National  Bank  Cases,  559 ;  State  v.  Fuller,  34  Conn.,  280 ; 
National  Bank  of  Winterset  v.  Eyre,  Brown's  National  Bank  Cases,  224  ;  Bank  of 
Bethel  v.  Pahquioque  Bank,  14  Wall.,  389;  Manufacturers'  National  Bank  v.  Bank, 
2  Abb.  U.  S.,  232  ;  Main,  Assignee,  v.  Second  National  Bank  of  Chicago,  6  Bissell, 
26  ;  Cadle  v.  Tracy,  11  Blatch.,  101  ;  Cook  v.  State  National  Bank,  52  N.  Y.,  962  ; 
Crocker  v.  Marine  National  Bank,  101  Mass.,  240  ;  Commercial  National  Bank  v. 
Simmons,  10  Albany  Law  Journal,  155;  Davis  v.  Cook,  9  Nevada,  134;  Chatham 
National  Bank  of  New  York  v.  Merchants'  National  Bank  of  West  Virginia,  4 
Thompson  &  Cook,  196;  Southwick  v.  First  National  Bank  of  Memphis,  7  Hun.,  96; 
Ocean  National  Bank  v.  Earle,  7  Hun.,  237;  St.  Louis  National  Bank  v.  Brinkman, 
1  Fed.  Rep..  45  ;  New  Orleans  Banking  Association  v.  Adams,  3  Woods,  21 ;  Dow  v. 
Trasburg  National  Bank  of  Orleans,  50  Vt.,  112. 

154.    Instruments  certified  by  Comptroller  may  be  Evidence. 
Section  884. — Every  certificate,  assignment,  and  convey- 
ance executed  by  the  Comptroller  of  the  Currency,  in  pursu- 


87 

ance  of  law  and  sealed  with  his  seal  of  office,  shall  be  received 
in  evidence  in  all  places  and  courts;  and  all  copies  of  papers  in 
his  office,  certified  by  him  and  authenticated  by  the  said  seal, 
shall  in  all  cases  be  evidence  equally  with  the  originals.  An 
impression  of  such  seal  directly  on  the  paper  shall  be  as  valid 
as  if  made  on  wax  or  wafer. 

Certified  copies  of  papers  are  usually  furnished  by  the  Comptroller's  office  upon 
affidavit  setting  forth  what  they  are  required  for,  and  that  the  evidence  can  be  pro- 
cured in  no  other  way,  provided  the  parties  requesting  are  entitled  to  receive  them, 
and  if  the  giving  of  the  copies  would  not  be  detrimental  to  the  public  service. 

155.   Certified  copies  of  Organization  Certificate  Evidence. 

Section  885. — Copies  of  the  organization  certificate  of  any 
National  banking  association,  duly  certified  by  the  Comptroller 
of  the  Currency  and  authenticated  by  his  seal  of  office,  shall  be 
evidence  in  all  courts  and  places  within  the  jurisdiction  of  the 
United  States  of  the  existence  of  the  association,  and  of  every 
matter  which  could  be  proved  by  the  production  of  the  orig- 
nal  certificate. 

AMENDMENTS   AND   ADDITIONAL   ACTS. 


An   Act  approved  June   20th,   1874. 

156.  "The  National  Bank  Act." 
Section  i.  That  the  Act  entitled  "An  Act  to  provide  a 
national  currency  secured  by  a  pledge  of  United  States  bonds, 
and  to  provide  for  the  circulation  and  redemption  thereof," 
approved  June  third,  eighteen  hundred  and  sixty-four,  shall 
hereafter  be  known  as  the  "National  Bank  Act." 

The  change  in  name  from  National  Currency  Act  to  National  Bank  Act  was  doubt- 
less the  result  of  a  radical  change  in  the  policy  of  Congress  since  the  date  of  the 
enactment  of  the  National  Currency  Act.  At  the  date  of  the  passage  of  the  Legal 
Tender  Acts  Congress  regarded  the  issue  of  legal-tender  notes  as  a  war  measure. 
The  original  Legal  Tender  Act  provided  that  the  holders  of  the  notes  might  at  any 
time  fund  them  into  5.20  six  per  cent,  bonds.  The  second  Legal  Tender  Act  was  to 
the  same  purport.  But  the  Act  of  March  3d,  18G3,  provided  that  the  right  to  fund 
legal-tender  notes  into  bonds  bearing  six  per  cent,  interest  was  to  cease  on  and 
after  the  1st  day  of  July,  1863.  This  was  the  first  step  in  the  perpetuation  of 
the  legal-tender  note,  which,  in  its  first  conception,  was  to  disappear  with  the  war. 
The  National  currency  was  to  be  National  bank  notes,  which  were  to  take  the  place 
of  the  funded   legal-tender  notes  and  all  other  forms  of  the  paper  money.     When 


88 

the  original  plan  was  changed  by  the  retention  of  the  legal-tender  notes,  to  call 
National  bank  notes  the  National  currency  became  an  absurdity,  and  the  name 
National  Currency  Act  was,  therefore,  changed  to  National  Bank  Act.  It  indicated 
the  fall  of  the  National  banking  system  from  the  place  of  primary  importance  and 
usefulness  in  National  finances,  and  a  retrograde  in  the  soundness  of  the  average 
financial  views  of  the  members  of  the  National  Congress. 

157.  Lawful  Money  Reserve  on  Circulation  Abolished. 
Section  2. — That  section  thirty-one  of  the  "  National  Bank 
Act"  be  so  amended  that  the  several  associations  therein  pro- 
vided for  shall  not  hereafter  be  required  to  keep  on  hand  any 
amount  of  money  whatever  by  reason  of  the  amount  of  their 
respective  circulations;  but  the  moneys  required  by  said  sec- 
tion to  be  kept  at  all  times  on  hand  shall  be  determined  by  the 
amount  of  deposits  in  all  respects,  as  provided  for  in  the  said 
section. 

See  Section  5191,  page  39. 
.  This  was  a  measure  of  apparent  convenience  and  benefit  to  the  banks,  permitting 
them  to  keep  a  less  reserve.  It  indicates,  however,  a  change  of  policy,  which 
doubtless  makes  the  banks  less  independently  strong  and  more  dependent  on  the 
Government.  It  is  in  fact  a  centralizing  policy  which  assimilates  the  National 
bank  note  more  and  more  to  the  likeness  of  a  Government  note. 

158.  Redemption  Fund;  Redemption  of  Notes,  &c. 
Section  3. — That  every  association  organized,  or  to  be  or- 
ganized, under  the  provisions  of  the  said  Act,  and  of  the  sev- 
eral Acts  amendatory  thereof,  shall  at  all  times  keep  and  have 
on  deposit  in  the  Treasury  of  the  United  States,  in  lawful 
money  of  the  United  States,  a  sum  equal  to  five  per  centum 
of  its  circulation,  to  be  held  and  used  for  the  redemption  of 
such  circulation,  which  sum  shall  be  counted  as  a  part  of  its 
lawful  reserve,  as  provided  in  section  two  of  this  Act;  and  when 
the  circulating  notes  of  any  such  associations,  assorted  or  un- 
assorted, shall  be  presented  for  redemption,  in  sums  of  one 
thousand  dollars  or  any  multiple  thereof,  to  the  Treasurer  of 
the  United  States,  the  same  shall  be  redeemed  in  United  States 
notes.  All  notes  so  redeemed  shall  be  charged  by  the  Treas- 
urer of  the  United  States  to  the  respective  associations  issuing 
the  same,  and  he  shall  notify  them  severally  on  the  first  day 
of  each  month,  or  oftener,  at  his  discretion,  of  the  amount  of 
such  redemptions ;  and  whenever  such  redemptions  for  any  as- 
sociation shall  amount  to  the  sum  of  five  hundred  dollars,  such 


§9 

association  so  notified  shall  forthwith  deposit  with  the  Treas- 
urer of  the  United  States  a  sum  in  United  States  notes  equal 
to  the  amount  of  its  circulating  notes  so  redeemed.  And  all 
notes  of  National  banks,  worn,  defaced,  mutilated,  or  other- 
wise unfit  for  circulation,  shall,  when  received  by  any  Assistant 
Treasurer,  or  at  any  designated  depository  of  the  United  States, 
be  forwarded  to  the  Treasurer  of  the  United  States  for  redemp- 
tion, as  provided  herein.  And  when  such  redemptions  have 
been  so  reimbursed,  the  circulating  notes  so  redeemed  shall  be 
forwarded  to  the  respective  associations  by  which  they  were  is- 
sued; but  if  any  of  such  notes  are  worn,  mutilated,  defaced,  or 
rendered  otherwise  unfit  for  use,  they  shall  be  forwarded  to  the 
Comptroller  of  the  Currency  and  destroyed,  and  replaced  as 
now  provided  by  law:  Provided,  That  each  of  said  associations 
shall  reimburse  to  the  Treasury  the  charges  for  transportation 
and  the  costs  for  assorting  such  notes, ::<  and  the  associations  here- 
after organized  shall  also  severally  reimburse  to  the  Treasury 
the  cost  of  engraving  such  plates  as  shall  be  ordered  by  each 
association  respectively,  and  the  amount  assessed  upon  each 
association  shall  be  in  proportion  to  the  circulation  redeemed, 
and  be  charged  to  the  fund  on  deposit  with  the  Treasurer: 
And  provided further,  That  so  much  of  section  thirty-two  of 
said  National  Bank  Act  requiring  or  permitting  the  redemp- 
tion of  its  circulating  notes  elsewhere  than  at  its  own  counter, 
except  as  provided  for  in  this  section,  is  hereby  repealed,  f 

This  section  requires,  instead  of  the  reserve  ou  circulation  abolished  by  the  pre- 
ceding section,  a  deposit  equal  to  five  per  cent,  of  its  circulation  by  each  bank,  in 
lawful  money,  with  the  United  States  Treasurer  for  the  redemption  of  its  circula- 
tion. The  deposit  so  made  may  be  counted  as  a  part  of  the  bank's  lawful  money 
reserve. 

When  National  bank  notes  of  one  or  more  associations  are  presented  in  lots  of 
$1000,  or  any  multiple  thereof,  the  Treasurer  may  redeem  the  same.  The  Treas- 
urer has  no  authority  in  law  for  redeeming  a  lot  less  than  $1000,  or  any  lot  unless 
it  is  in  even  thousands.  The  object  of  this  was  undoubtedly  to  avoid  a  multiplicity 
of  accounts  with  the  outside  public.  The  notes  are  charged  to  the  respective  asso- 
ciations issuing  them  until  the  notes  so  redeemed  for  and  charged  to  any  one  asso- 
ciation amount  to  $500,  when  that  association  is  notified  and  required  to  deposit  £ 
lawful   money  equal  to  the  amount  redeemed.     Theoretically  the  five  per  cent,  re- 

*See  Act  of  July  12th,  1882,  Section  8,  page  111. 

■[See  Sections  5102,  5105,  and  5226,  pages  40,  41,  and  63. 

%  See  Decisions  of  Attorney  General. 


9o 

demption  fund  is  never  touched.  It  remains  intact,  and  this  explains  why  it  can 
consistently  be  counted  as  a  part  of  the  lawful  money  reserve  of  a  bank.  When  a 
hank  first  makes  its  five  per  cent,  deposit  it  receives  a  credit  on  the  books  of  the 
Treasury.  The  cash  goes  into  the  general  fund  and  becomes  indistinguishably 
mingled  therewith. 

The  Treasury  redeems  the  notes  as  they  appear  from  its  own  funds,  and  in  tho 
contemplation  of  law  no  charge  is  made  to  the  five-per-cent.  account  of  the  bank, 
but  when  the  redemptions  made  for  it  reach  $500,  then  it  is  notified  and  required  to 
reimburse  the  Treasury  for  the  sum  paid  on  its  behalf.  The  requirement  that 
National  bank  notes  unfit  for  circulation  shall  be  sent  in  by  the  Assistant  Treasurers 
and  designated  depositaries  of  the  United  States  is  intended  to  keep  the  circula- 
tion up  to  a  fair  standard  of  newness  and  cleanliness.  Notes  redeemed  at  the 
Treasury  fit  for  circulation  are  sent  back  to  the  banks  ;  unfit  notes  are  destroyed  as 
provided  in  Section  5184,  (which  see,  as  well  as  remarks  under  Section  5232.) 

The  associations  are,  according  to  the  amount  of  notes  redeemed  for  each,  to  pay 
all  the  expenses  of  this  process  of  redemption,  such  expense  to  be  charged  to  the 
five-per-cent.  account.  Prior  to  the  passage  of  this  section  the  expense  of  the 
plates  and  all  expense  of  preparing  the  notes  of  National  banks  were  paid  out  of  the 
proceeds  of  the  tax  on  circulation ;  but  plates  ordered  after  the  date  of  this  sec- 
tion are  to  be  paid  for  by  the  banks  themselves.  (See  Section  5173,  and  also  Section 
8,  Act  of  July  12th,  1882.)  Banks  are  not  relieved  from  redeeming  their  own  notes 
at  their  own  counters.  (See  remarks  under  Section  5227,  page  63.)  The  detailed 
regulations  governing  the  redemption  of  National  bank  notes  will  be  found  on 
page    167,  this  work. 

159.  Retiring  Circulation  and  Withdrawing  Bonds. 
Section  4. — That  any  association  organized  under  this  Act, 
or  any  of  the  Acts  of  which  this  is  an  amendment,  desiring  to 
withdraw  its  circulating  notes,  in  whole  or  in  part,  may,  upon 
the  deposit  of  lawful  money  with  the  Treasurer  of  the  United 
States  in  sums  of  not  less  than  nine  thousand  dollars,  take 
up  the  bonds  which  said  association  has  on  deposit  with  the 
Treasurer  for  the  security  of  such  circulating  notes,  which 
bonds  shall  be  assigned  to  the  bank  in  the  manner  specified  in 
the  nineteenth  section  of  the  National  Bank  Act;  and  the  out- 
standing notes  of  said  association,  to  an  amount  equal  to  the 
legal-tender  notes  deposited,  shall  be  redeemed  at  the  Treasury 
of  the  United  States,  and  destroyed  as  now  provided  by  law: 
Provided,  That  the  amount  of  the  bonds  on  deposit  for  circu- 
lation shall  not  be  reduced  below  fifty  thousand  dollars. 

See  Section  5167,  page  29. 

See  Act  of  July  12th,  1882,  Section  9,  page  111. 
See  Sections  5159,  5160,  and  5167,  pages  26  and  29. 

Prior  to  the  enactment  of  this  section  the  only  method  by  which  National  bank3 
not  in  liquidation  could  withdraw  any  portion  of  their  bonds  was  by  gathering  up 


Of  THt    j 

VNIYER8/TY 


9i 


their  own  circulation,  and  surrendering  the  same  for  cancellation  and  destruction  to 
the  Comptroller  of  the  Currency.  (See  Section  5167,  page  29.)  This  section  also 
reduces  the  minimum  of  bonds  to  be  kept  from  an  amount  equal  to  one-third  of  the 
capital  stock,  and  not  less  than  $30,000  to  $50,000  in  each  case.  (See  Sections  5150 
and  51  GO,  page  2G.)  The  Revised  Statutes  did  not  become  law  until  two  days  after 
the  passage  of  the  Act  of  June  20th,  1874,  viz.,  on  June  22d,  and  therefore  the  re- 
quirement that  notes  redeemed  under  this  section  be  destroyed  as  then  provided  by 
law  must  refer  to  the  then  existing  law,  now  embodied  in  Section  5184.  The  mini- 
mum of  bonds  required  to  be  kept  on  deposit  by  National  bauks  is  in  certain  cases — 
banks  with  a  capital  of  $150,000  and  less — further  reduced  by  the  provisions  of 
Section  S  of  the  Act  of  July  12th,  18S2,  page  111. 

160.  The  Charter  Number  of  Banks  to  be  on  Notes. 
Section  5. — That  the  Comptroller  of  the  Currency  shall, 
under  such  rules  and  regulations  as  the  Secretary  of  the 
Treasury  may  prescribe,  cause  the  charter  numbers  of  the 
association  to  be  printed  upon  all  National  bank  notes  which 
may  be  hereafter  issued  by  him. 

This  is  for  convenience  in  assorting  notes. 

161.  Amount  of  United  States  Notes  Allowed  for  Circulation. 

Section  6. — That  the  amount  of  United  States  notes  out- 
standing and  to  be  used  as  a  part  of  the  circulating  medium 
shall  not  exceed  the  sum  of  three  hundred  and  eighty-two 
million  dollars,  which  said  sum  shall  appear  in  each  monthly 
statement  of  the  public  debt,  and  no  part  thereof  shall  be  held 
or  used  as  a  reserve. 

"Section  8  of  the  Act  of  January  14th,  1875,  authorized  an  increase  of  the  circu- 
lation of  the  National  banks  in  accordance  with  existing  law  without  respect  to  the 
limit  previously  existing,  but  required  the  Secretary  of  the  Treasury  to  retire 
legal-tender  notes  to  an  amount  equal  to  eighty  per  cent,  of  the  National  bank  notes 
thereafter  issued,  until  the  amount  of  such  legal-tender  notes  outstanding  should 
be  300  millions,  and  no  more.  Under  the  operation  of  this  Act  $35,318,984  of 
legal-tender  notes  were  retired,  leaving  the  amount  in  circulation  on  May  31st, 
1878,  the  date  of  the  repeal  of  this  provision,  $346,681,016,  which  is  the  amount 
now  outstanding.''     (From  United  States  Notes,  by  Hon.  John  Jay  Knox,  page  140.) 

162.  Relative  to  Withdrawal  of  $55,000,000  Circulation. 
Section  7. — That  so  much  of  the  Act  entitled  "An  Act  to 
provide  for  the  redemption  of  the  three  per  cent,  temporary- 
loan  certificates,  and  for  an  increase  of  National  bank  notes," 
as  provides  that  no  circulation  shall  be  withdrawn  under  the  pro- 
visions of  section  six  of  said  Act,  until  after  the  fifty-four  millions 
granted  in  section  one  of  said  Act  shall  have  been  taken  up,  is 
hereby  repealed  ;  and  it  shall  be  the  duty  of  the  Comptroller 


02 

of  the  Currency,  under  the  direction  of  the  Secretary  of  the 
Treasury,  to  proceed  forthwith,  and  he  is  hereby  authorized 
and  required,  from  time  to  time,  as  applications  shall  be  duly 
made  therefor,  and  until  the  full  amount  of  fifty-five  million 
dollars  shall  be  withdrawn,  to  make  requisitions  upon  each  of 
the  National  banks  described  in  said  section,  and  in  the  man- 
ner therein  provided,  organized  in  States  having  an  excess  of 
•circulation,  to  withdraw  and  return  so  much  of  their  circula- 
tion as  by  said  Act  may  be  apportioned  to  be  withdrawn  from 
them,  or,  in  lieu  thereof,  to  deposit  in  the  Treasury  of  the 
United  States  lawful  money  sufficient  to  redeem  such  circula- 
tion ;  and  upon  the  return  of  the  circulation  required,  or  the 
deposit  of  lawful  money,  as  herein  provided,  a  proportionate 
amount  of  the  bonds  held  to  secure  the  circulation  of  such  as- 
sociation as  shall  make  such  return  or  deposit  shall  be  sur- 
rendered to  it. 

Obsolete.     See  Section  3,  Act  of  January  14th,  1875,  page  94. 
See   Section   5179,  p.  34.     Superseded  by  Act  of  January  14th,  1875,  Section  3, 
page  94. 

163.  Bonds  to  be  Sold  on  Failure  to  Return  Circulation. 
Section  8. — That  upon  the  failure  of  the  National  banks 
upon  which  requisition  for  circulation  shall  be  made,  or  of  any 
of  them,  to  return  the  amount  required,  or  to  deposit  in  the 
Treasury  lawful  money  to  redeem  the  circulation  required 
within  thirty  days,  the  Comptroller  of  the  Currency  shall  at 
once  sell,  as  provided  in  section  forty-nine  of  the  National 
Currency  Act,  approved  June  third,  eighteen  hundred  and 
sixty-four,  bonds  held  to  secure  the  redemption  of  the  circula- 
tion of  the  association  or  associations  which  shall  so  fail,  to  an 
amount  sufficient  to  redeem  the  circulation  required  of  such 
association  or  associations,  and  with  the  proceeds,  which  shall 
be  deposited  in  the  Treasury  of  the  United  States,  so  much  of 
the  circulation  of  such  association  or  associations  shall  be  re- 
deemed as  will  equal  the  amount  required  and  not  returned  ; 
and  if  there  be  an  excess  of  proceeds  over  the  amount  required 
for  such  redemption,  it  shall  be  returned  to  the  association  or 
associations  whose  bonds  shall  have  been  sold.  And  it  shall 
be  the  duty  of  the  Treasurer,  Assistant  Treasurers,  designated 
depositaries,    and  National  bank  depositaries  of  the  United 


93 

States,  who  shall  be  kept  informed  by  the  Comptroller  of  the 
Currency  of  such  associations  as  shall  fail  to  return  circulation 
as  required,  to  assort  and  return  to  the  Treasury  for  redemp- 
tion the  notes  of  such  associations  as  shall  come  into  their 
hands  until  the  amount  required  shall  be  redeemed,  and  in 
like  manner  to  assort  and  return  to  the  Treasury,  for  redemp- 
tion, the  notes  of  such  National  banks  as  have  failed,  or  gone 
into  voluntary  liquidation  for  the  purpose  of  winding  up  their 
affairs,  and  of  such  as  shall  hereafter  so  fail  or  go  into  liqui- 
dation. 

Obsolete.    Superseded  by  Act  of  January  14tb,  18~5,  Section  3,  page  94.    See  Sec- 
tion 5231,  page  65. 

164.  Issue  of  New  Notes  for  $55,000,000  Withdrawn,  &c. 
Section  9. — That  from  and  after  the  passage  of  this  Act  it 
shall  be  lawful  for  the  Comptroller  of  the  Currency,  and  he  is 
hereby  required,  to  issue  circulating  notes,  without  delay,  as 
applications  therefor  are  made,  not  to  exceed  the  sum  of  fifty- 
five  million  dollars,  to  associations  organized,  or  to  be  organ- 
ized, in  those  States  and  Territories  having  less  than  their 
proportion  of  circulation,  under  an  apportionment  made  on  the 
basis  of  population  and  of  wealth,  as  shown  by  the  returns  of 
the  census  of  eighteen  hundred  and  seventy  ;  *  and  every  asso- 
ciation hereafter  organized  shall  be  subject  to,  and  be  governed 
by,  the  rules,  restrictions,  and  limitations,  and  possess  the 
rights,  privileges,  and  franchises,  now  or  hereafter  to  be  pre- 
scribed by  law  as  to  National  banking  associations,  with  the 
same  power  to  amend,  alter,  and  repeal  provided  by  the  ' '  Na- 
tional Bank  Act  :"  Provided,  That  the  whole  amount  of  cir- 
culation withdrawn  and  redeemed  from  banks  transacting  busi- 
ness shall  not  exceed  fifty-five  million  dollars,  and  that  such 
circulation  shall  be  withdrawn  and  redeemed  as  it  shall  be 
necessary  to  supply  the  circulation  previously  issued  to  the 
banks  in  those  States  having  less  than  their  apportionment :  * 
And  provided  further,  That  not  more  than  thirty  million  dol- 
lars shall  be  withdrawn  and  redeemed  as  herein  contemplated 
during  the  fiscal  year  ending  June  thirtieth,  eighteen  hundred 
and  seventy-five. 

*  Obsolete.     Superseded  by  Act  of  January  14th,  1875,  Section  3,  page  94. 


94 


Extract  from  an  Act  approved  June  23d,  1874. 

165.  Notes  to  be  Destroyed  by  Maceration. 

For  the  maceration  of  National  bank  notes,  United  States 
notes,  and  other  obligations  of  the  United  States  authorized 
to  be  destroyed,  ten  thousand  dollars;  and  that  all  such  issues 
hereafter  destroyed  may  be  destroyed  by  maceration  instead 
of  burning  to  ashes,  as  now  provided  by  law;  and  that  so 
much  of  sections  twenty-four  and  forty-three  of  the  National 
Currency  Act  as  requires  National  bank  notes  to  be  burned  to 
ashes  is  hereby  repealed. 

See  Sections  5184  and  5225,  pages  36  and  62. 

An  Act  approved  January  14th,  1875. 

166.  Silver  Coins  to  Redeem  Fractional  Currency. 

That  the  Secretary  of  the  Treasury  is  hereby  authorized  and 
required,  as  rapidly  as  practicable,  to  cause  to  be  coined,  at  the 
mints  of  the  United  States,  silver  coins  of  the  denominations  of 
ten,  twenty-five,  and  fifty  cents,  of  standard  value,  and  to  issue 
them  in  redemption  of  an  equal  number  and  amount  of  frac- 
tional currency  of  similar  denominations,  or,  at  his  discretion, 
he  may  issue  such  silver  coins  through  the  mints,  the  sub- 
treasuries,  public  depositaries,  and  post-offices  of  the  United 
States ;  and,  upon  such  issue,  he  is  hereby  authorized  and  re- 
quired to  redeem  an  equal  amount  of  such  fractional  currency, 
until  the  whole  amount  of  such  fractional  currency  outstanding 
shall  be  redeemed. 

167.  Charge  for  Coining  Gold  Bullion  Repealed. 

Section  2. — That  so  much  of  section  three  thousand  five 
hundred  and  twenty-four  of  the  Revised  Statutes  of  the  United 
States  as  provides  for  a  charge  of  one-fifth  of  one  per  centum 
for  converting  standard  gold  bullion  into  coin  is  hereby  re- 
pealed ;  and  hereafter  no  charge  shall  be  made  for  that  service. 

168.   Repeal  of  Limit  of  Circulation  &c ;  Redemption  of   Legal 

Tenders. 

Section  3. — That  section  five  thousand  one  hundred  and 

seventy-seven  of  the  Revised  Statutes,  limiting  the  aggregate 


95 

amount  of  circulating  notes  of  National  banking  associations, 
be,  and  is  hereby,  repealed  ;  and  each  existing  banking  asso- 
ciation may  increase  its  circulating  notes  in  accordance  with 
existing  law  without  respect  to  said  aggregate  limit ;  and  new 
banking  associations  may  be  organized  in  accordance  with  ex- 
isting law  without  respect  to  said  aggregate  limit ;  and  the 
provisions  of  lawT  for  the  withdrawal  and  redistribution  of  Na- 
tional bank  currency  among  the  several  States  and  Territories 
are  hereby  repealed.  And  whenever,  and  so  often,  as  circula- 
ting notes  shall  be  issued  to  any  such  banking  association,  so 
increasing  its  capital  or  circulating  notes,  or  so  newly  organized 
as  aforesaid,  it  shall  be  the  duty  of  the  Secretary  of  the  Treasury 
to  redeem  the  legal-tender  United  States  notes  in  excess  only 
of  three  hundred  million  of  dollars,  to  the  amount  of  eiehtv 
per  centum  of  the  sum  of  National  bank  notes  so  issued  to  anv 
such  banking  association  as  aforesaid,  and  to  continue  such 
redemption  as  such  circulating  notes  are  issued  until  there 
shall  be  outstanding  the  sum  of  three  hundred  million  dollars 
of  such  legal-tender  United  States  notes,  and  no  more.  *  And 
on  and  after  the  first  day  of  January,  anno  Domini  eighteen 
hundred  and  seventy-nine,  the  Secretary  of  the  Treasury  shall 
redeem,  in  coin,  the  United  States  legal-tender  notes  then  out- 
standing, on  their  presentation  for  redemption  at  the  office  of 
the  Assistant  Treasurer  of  the  United  States  in  the  city  of  New 
York,t  in  sums  of  not  less  than  fifty  dollars.  And  to  enable 
the  Secretary  of  the  Treasury  to  prepare  and  provide  for  the 
redemption  in  this  Act  authorized  or  required,  he  is  authorized 
to  use  any  surplus  revenues,  from  time  to  time,  in  the  Treasury 
not  otherwise  appropriated,  and  to  issue,  sell,  and  dispose  of, 
at  not  less  than  par,  in  coin,  either  of  the  descriptions  of  bonds 
of  the  United  States  described  in  the  Act  of  Congress  approved 
July  fourteenth,  eighteen  hundred  and  seventy,  entitled  "An 
Act  to  authorize  the  refunding  of  the  National  debt/'  with 
like  qualities,  privileges,  and  exemptions,  to  the  extent  neces- 
sary to  carry  this  Act  into  full  effect,  and  to  use  the  proceeds 

*  Subsequent   Act  of  May  31st,  1878.  forbui   further  retirement  of  legal-tender 
notes  and  fixed  limit  at  amount  then  outstanding,  $346,681,016. 
f  Amended  by  Act  March  3,  1S3T,  page  L15B. 


96 

thereof  for  the  purposes  aforesaid.     And  all  provisions  of  law- 
inconsistent  with  the  provisions  of  this  Act  are  hereby  repealed. 

See  Sections  5177  to  5181,  pages  33  and  35. 

See  Act  of  June  20th,  1874,  Sections  7,  8,  and  9. 

This  Act  removed  from  the  statute  book  any  restriction  as  to  the  aggregate 
amount  of  National  bank  circulation.  It  was  plain  to  Congress  at  this  time  that 
with  the  resumption  of  specie  payments  the  legal-tender  notes  would  finally  disap- 
pear. They  provided  a  method  for  the  gradual  reduction  of  such  notes  during  the 
period  anterior  to  the  date  selected  for  resumption,  and  contemplated  that  National 
bank  notes  would  more  than  fill  the  void  left  by  the  retired  legal-tender  notes,  cal- 
culating about  20  per  cent,  of  the  contemplated  new  issues  of  National  bank  notes 
would  meet  the  demands  of  the  gradually-increasing  business  of  the  country.  If 
this  policy  had  been  adhered  to,  it  is  probable  that  with  the  resumption  of  specie  pay- 
ments the  legal-tender  notes  would  have  been  presented  for  redemption,  and  would 
have  been  canceled  and  not  reissued,  National  bank  notes  taking  their  place,  and, 
with  the  gold  coin  issued  in  redemption  of  the  legal-tender  notes,  have  formed  the 
circulating  medium  of  the  United  States. 

The  Act  of  May  31st,  1878,  indicated  the  ascendancy  of  another  spirit  in  the 
councils  of  the  Nation  fixing,  it  has  been  seen,  a  limit  below  which  legal-tender 
notes  should  not  be  reduced.  Even  with  the  resumption  of  specie  payments  no 
reduction  of  the  aggregate  of  legal-tender  notes  has  occurred,  inasmuch  as  such 
notes  are  reissued  as  soon  as  redeemed  in  order  to  fulfill  the  requirements  of  the  Act 
of  May  31st,  1878.  The  previous  Act  of  February,  1878,  authorizing  the  issue  of 
silver  certificates,  was  a  chip  of  the  same  block,  and  the  aggregate  issue  of  National 
bank  notes  instead  of  increasing,  as  was  contemplated  by  the  Act  of  January  14th, 
1875,  has  dwindled  instead  in  competition  with  these  two  forms  of  Government 
currency.  It  is  a  maxim  in  finance  that  the  inferior  currency  will  always  drive  out 
the  superior. 

An  Act  approved  January  19th,  1875. 
169.  Repeal  of  Limit  of  National  Gold  Bank  Circulation. 
That  so  much  of  section  five  thousand  one  hundred  and  eighty- 
five  of  the  Revised  Statutes  of  the  United  States  as  limits  the  cir- 
culation of  banking  associations,  organized  for  the  purpose  of 
issuing  notes  payable  in  gold,  severally  to  one  million  dollars, 
be,  and  the  same  is  hereby,  repealed  ;  and  each  of  such  existing 
banking  associations  may  increase  its  circulating  notes,  and 
new  banking  associations  may  be  organized,  in  accordance 
with  existing  law,  without  respect  to  such  limitation. 

See  Section  5185,  page  37. 

There  are  at  present  no  gold  banks. 

Extract  from  an  Act  approved  February  8th,  1875. 
170.  Tax  on  Checks ;  Notes  of  State  Banks,  &c. 
Section  15. — That  the  words  "bank  check,  draft,  or  order 


97 

for  the  payment  of  an}-  sum  of  money  whatsoever,  drawn  upon 
any  bank,  banker,  or  trust  company,  at  sight  or  on  demand, 
two  cents, ' '  in  Schedule  B  of  the  Act  of  June  thirtieth,  eighteen 
hundred  and  sixty-four,  be,  and  the  same  is  hereby,  stricken 
out,  and  the  following  paragraph  inserted  in  lieu  thereof : 

"Bank  check,  draft,  order,  or  voucher  for  the  payment  of 
any  sum  of  money  whatsoever,  drawn  upon  any  bank,  banker, 
or  trust  company,  two  cents. ' '  * 

Section  19. — That  every  person,  firm,  association  other  than 
National  bank  associations,  and  every  corporation,  State  bank, 
or  State  banking  association,  shall  pay  a  tax  of  ten  per  centum 
on  the  amount  of  their  own  notes  used  for  circulation  and  paid 
out  by  them,  f 

171.  Tax  on  Notes  of  State  Banks,  Cities,  &c. 

Section  20. — That  every  such  person,  firm,  association, 
corporation,  State  bank,  or  State  banking  association,  and  also 
every  National  banking  association,  shall  pay  a  like  tax  of  ten 
per  centum  on  the  amount  of  notes  of  any  person,  firm,  asso- 
ciation other  than  a  National  banking  association,  or  of  any 
corporation,  State  bank,  or  State  banking  association,  or  of 
any  town,  city,  or  municipal  corporation,  used  for  circulation 
and  paid  out  by  them. 

See  Sections  3412  and  3413,  page  72. 

172.  Returns  to  Commissioner  of  Internal  Revenue. 
Section  21. — That  the  amount  of  such  circulating  notes, 
and  of  the  tax  due  thereon,  shall  be  returned,  and  the  tax  paid 
at  the  same  time,  and  in  the  same  manner,  and  with  like  pen- 
alties for  failure  to  return  and  pay  the  same,  as  provided  by 
law  for  the  return  and  payment  of  taxes  on  deposits,  capital, 
and  circulation,  imposed  by  the  existing  provisions  of  internal 
revenue  law. 

See  Section  3414,  page  72. 

Extracts  from  an  Act  approved  February  i8th,  1875 
173.  Correcting  Errors  in  Revised  Statutes. 
That   for  the  purpose  of  correcting  errors  and  supplying 

*  Section  15  obsolete. 

fSee  Sections  3412,  3413,  3418,  pages  72,  74. 


98 

omissions  in  the  Act  entitled  "An  Act  to  revise  and  consoli- 
date the  statutes  of  the  United  States  in  force  on  the  first  day 
of  December,  anno  Domini  one  thousand  eight  hundred  and 
seventy-three,"  so  as  to  make  the  same  truly  express  such 
laws,  the  following  amendments  are  hereby  made  therein  :* 

Section  three  hundred  and  thirty  is  amended  by  adding 
thereto  the  following:  "A  description  of  the  seal,  with  an  im- 
pression thereof,  and  a  certificate  of  approval  by  the  Secretary 
of  the  Treasury,  shall  be  filed  in  the  office  of  the  Secretary  of 
State." 

Section  three  hundred  and  thirty-three  is  amended  by  in- 
serting, after  the  word  ' '  Congress, ' '  in  the  second  line,  the 
words  "  at  the  commencement  of  its  session." 

Section  six  hundred  and  twenty-nine  is  amended  by  striking 
out,  in  the  first  line  of  paragraph  eleven,  the  words  ' '  or 
against. ' ' 

Section  three  thousand  four  hundred  and  seventeen  is 
amended  by  inserting,  in  the  fourthf  line,  after  the  word 
"  twelve,"  the  words  "  thirty-four  hundred  and  thirteen." 

Section  three  thousand  eight  hundred  and  eleven  is  amended 
by  striking  out  "  Secretary  of  the  Treasury,"  and  inserting 
' '  Comptroller  of  the  Currency  ; ' '  also,  by  adding,  after  the 
word  ' '  banks, ' '  in  the  second  line,  the  words  ' '  and  banks  un- 
der State  and  Territorial  laws." 

Section  five  thousand  one  hundred  and  eighty-three  is 
amended  by  inserting,  after  the  word  "issue,"  in  the  second 
line,  the  words  ' '  post-notes  or. ' ' 

Section  five  thousand  one  hundred  and  ninety-eight  is 
amended  by  adding  thereto  the  following  :  ' '  That  suits,  ac- 
tions, and  proceedings  against  any  association  under  this  Title 
may  be  had  in  any  circuit,  district,  or  territorial  court  of  the 
United  States  held  within  the  district  in  which  such  associa- 
tion may  be  established,  or  in  any  State,  county,  or  municipal 
court  in  the  county  or  city  in  which  said  association  is  located 
having  jurisdiction  in  similar  cases." 

Section    five   thousand    two   hundred   and    twenty-four  is 

*The  corrections  indicated  have  been  made  in  the  text, 
f  Fifth  line  of  this  work. 


99 

amended  by  adding  thereto  the  following  :  "And  if  any  such 
bank  shall  fail  to  make  the  deposit  and  take  up  its  bonds  for 
thirty  days  after  the  expiration  of  the  time  specified,  the  Comp- 
troller of  the  Currency  shall  have  power  to  sell  the  bonds 
pledged  for  the  circulation  of  said  bank,  at  public  auction  in 
New  York  city,  and,  after  providing  for  the  redemption  and 
cancellation  of  said  circulation  and  the  necessary  expenses  of 
the  sale,  to  pay  over  any  balance  remaining  to  the  bank  or  its 
legal  representative. ' ' 

Section  five  thousand  two  hundred  and  twenty-eight  is 
amended  by  striking  out,  in  the  third  line,  the  words  u  of  for- 
feiture of  the  bonds,"  and  inserting  the  word  "thereof." 

Section  five  thousand  four  hundred  and  thirteen  is  amended 
by  inserting,  in  the  third  line,  after  the  word  "  National,"  the 
word  "bank." 

An  Act  approved  February  19th,  1875. 
174.  Compensation  of  National  Bank  Examiners. 
That  section  five  thousand  two  hundred  and  forty  of  the  Re- 
vised Statutes  of  the  United  States  be  so  amended*  that  the  lat- 
ter clause  of  said  section,  after  the  word  "  Comptroller"  in  the 
eighth  t  line  of  said  section,  be  amended  so  that  the  same 
shall  read  as  follows,  namely:  "That  all  persons  appointed  to 
be  examiners  of  National  banks  not  located  in  the  redemption 
cities  specified  in  section  five  thousand  one  hundred  and  ninety- 
two  of  the  Revised  Statutes  of  the  United  States,  or  in  any  one 
of  the  States  of  Oregon,  California,  and  Nevada,  or  in  the  Ter- 
ritories, shall  receive  compensation  for  such  examination  as 
follows :  For  examining  National  banks  having  a  capital  less 
than  one  hundred  thousand  dollars,  twenty  dollars;  those  hav- 
ing a  capital  of  one  hundred  thousand  dollars  and  less  than 
three  hundred  thousand  dollars,  twenty-five  dollars ;  those 
having  a  capital  of  three  hundred  thousand  dollars  and  less 
than  four  hundred  thousand  dollars,  thirty-five  dollars;  those 
having  a  capital  of  four  hundred  thousand  dollars  and  less  than 
five  hundred  thousand  dollars,  forty  dollars;  those  having  a  capi- 

*  This  amendment  has  been  incorporated  into  the  text, 
f  Ninth  line  of  this  work. 


IOO 

tal  of  five  hundred  thousand  dollars  and  less  than  six  hundred 
thousand  dollars,  fifty  dollars  ;  those  having  a  capital  of  six 
hundred  thousand  dollars  and  over,  seventy-five  dollars;  which 
amounts  shall  be  assessed  by  the  Comptroller  of  the  Currency 
upon,  and  paid  by,  the  respective  associations  so  examined,  and 
shall  be  in  lieu  of  the  compensation  and  mileage  heretofore 
allowed  for  making  said  examinations;  and  persons  appointed 
to  make  examination  of  National  banks  in  the  cities  named 
in  section  five  thousand  one  hundred  and  ninety-two  of  the 
Revised  Statutes  of  the  United  States,  or  in  any  one  of  the 
States  of  Oregon,  California,  and  Nevada,  or  in  the  Territories, 
shall  receive  such  compensation  as  may  be  fixed  by  the  Secre- 
tary of  the  Treasury  upon  the  recommendation  of  the  Comp- 
troller of  the  Currency;  and  the  same  shall  be  assessed  and 
paid  in  the  manner  hereinbefore  provided. ' ' 

See  page  57. 

An  Act  approved  June  23d,  1874. 

175.  Stamping  Unstamped  Checks.  &c. ;  Limit. 

That  all  instruments,  documents,  and  papers  heretofore  made, 
signed,  or  issued,  and  subject  to  a  stamp-duty  or  tax  under 
any  law  heretofore  existing  and  remaining  unstamped,  may  be 
stamped  by  any  person  having  an  interest  therein,  or,  where  the 
original  is  lost,  a  copy  thereof,  at  any  time  prior  to  the  first  of 
January,  eighteen  hundred  and  seventy-six.  And  said  instru- 
ments, documents,  and  papers,  and  any  record  thereof,  shall 
be  as  valid,  to  all  intents  and  purposes,  as  if  stamped  when 
made,  signed,  or  issued;  but  no  right  acquired  in  good  faith 
shall  in  any  manner  be  affected  by  such  stamping  as  aforesaid : 
Provided,  That  to  render  such  stamping  valid,  the  person  de- 
siring to  stamp  the  same  shall  appear  with  the  instrument 
document,  or  paper,  or  copy  thereof,  before  some  judge  or  clerk 
of  a  court  of  record,  and  before  him  affix  the  proper  stamp; 
and  the  said  judge  or  clerk  shall  indorse  on  such  writing  or 
copy  a  certificate,  under  his  hand  when  made  by  said  judge, 
and  under  his  hand  and  seal  when  made  by  said  clerk,  setting 
forth  the  date  at  which,  and  the  place  where,  the  stamp  was 
so  affixed,  the  name  of  the  person  presenting  said  writing  or 


IOI 

copy,  the  fact  that  it  was  thus  affixed,  and  that  the  stamp  was 
duly  canceled  in  his  presence. 

Section  2. — That  all  laws  or  parts  of  laws  in  conflict  with 
the  above  are  hereby  repealed. 

See  Section  3422,  page  75. 

Extract  from  an  Act  approved  February  18th,  1875. 
176.  Unstamped  Instruments. 
Section  three  thousand  four  hundred  and  twenty-two  is 
amended  by  inserting,  after  the  word  "issued,"  in  the  twenty- 
seventh*  line,  the  following  :  "And  provided  further,  That 
where  it  shall  appear  to  said  collector,  upon  oath  or  otherwise, 
to  his  satisfaction,  that  any  such  instrument  has  not  been  duly 
stamped  at  the  time  of  making  or  issuing  the  same,  by  reason 
of  accident,  mistake,  inadvertence,  or  urgent  necessity,  and 
without  any  willful  design  to  defraud  the  United  States  of  the 
stamps,  or  to  evade  or  delay  the  payment  thereof,  then,  and 
in  such  case,  if  such  instrument,  or,  if  the  original  be  lost,  a 
copy  thereof,  duly  certified  by  the  officer  having  charge  of  any 
records  in  which  such  original  is  required  to  be  recorded,  or 
otherwise  duly  proven  to  the  satisfaction  of  the  collector,  shall, 
within  twelve  calendar  months  after  the  making  or  issuing 
thereof,  be  brought  to  the  said  collector  of  revenue  to  be 
stamped,  and  the  stamp-tax  chargeable  thereon  shall  be  paid, 
it  shall  be  lawful  for  the  said  collector  to  remit  the  penalty 
aforesaid,  and  to  cause  such  instrument  to  be  duly  stamped." 

An  Act  approved  June  30th,  1876. 

177.  Receiver,— for  Violation  of  Law,  Insolvency,  &c. 
Section  i.  That  whenever  any  National  banking  associa- 
tion shall  be  dissolved,  and  its  rights,  privileges,  and  fran- 
chises declared  forfeited,  as  prescribed  in  section  fifty-two 
hundred  and  thirty-nine  of  the  Revised  Statutes  of  the 
United  States,  or  whenever  any  creditor  of  any  National 
banking  association  shall  have  obtained  a  judgment  against 
it  in  any  court  of  record,  and  made  application,  accompanied 
by  a  certificate  from  the  clerk  of  the  court  stating  that  such 

*  Thirty-second  line  of  this  work. 


102 

judgment  has  been  rendered  and  has  remained  unpaid  for  the 
space  of  thirty  days,  or  whenever  the  Comptroller  shall  be- 
come satisfied  of  the  insolvency  of  the  National  banking  asso- 
ciation, he  may,  after  due  examination  of  its  affairs,  in  either 
case,  appoint  a  receiver,  who  shall  proceed  to  close  up  such 
association,  and  enforce  the  personal  liability  of  the  sharehold- 
ers, as  provided  in  section  fifty-two  hundred  and  thirty-four  of 
said  statutes. 

See  Sections  5234  and  5239,  pages  66  and  69. 

This  section  makes  insolvency  due  cause  for  the  appointment  of  a  receiver  by  the 
Comptroller,  either  insolvency  indicated  by  unpaid  judgment  or  satisfaction  on  the 
Comptroller's  part  of  insolvency.  In  either  case  an  examination  of  the  bank's  af- 
fairs must  first  be  made.  It  also  provides  that  the  Comptroller  may  appoint  a  re- 
ceiver to  take  charge  of  the  affairs  of  a  bank  whose  franchises,  &c,  have  been  for- 
feited after  proceedings  under  Section  5239. 

178.  Enforcement  of  Individual  Liability  of  Shareholders. 

Section  2. — That  when  any  National  banking  association 
shall  have  gone  into  liquidation  under  the  provisions  of  section 
five  thousand  two  hundred  and  twenty  of  said  statutes,  the  in- 
dividual liability  of  the  shareholders  provided  for  by  section 
fifty-one  hundred  and  fifty-one  of  said  statutes  may  be  enforced 
by  any  creditor  of  such  association,  by  bill  in  equity  in  the 
nature  of  a  creditor's  bill,  brought  by  such  creditor  on  behalf 
of  himself  and  of  all  other  creditors  of  the  association,  against 
the  shareholders  thereof,  in  any  court  of  the  United  States 
having  original  jurisdiction  in  equity  for  the  district  in  which 
such  association  may  have  been  located  or  established. 

This  enables  creditors  of  banks  which  have  gone  into  voluntary  liquidation  to 
protect  themselves  and  enforce  the  liability  of  shareholders  through  the  courts 
without  reference  to  the  Comptroller  of  the  Currency.  Under  this  section  the  court 
might  appoint  a  receiver. 

179.  Agent  to  Manage  Affairs  of  Failed  Bank ;  Election, 
Powers,  &e. 

Section  3. — That  whenever  any  association  shall  have  been 
or  shall  be  placed  in  the  hands  of  a  receiver,  as  provided  in 
section  fifty-two  hundred  and  thirty-four  and  other  sections  of 
said  statutes,  and  when,  as  provided  in  section  fifty-two  hun- 
dred and  thirty-six  thereof,  the  Comptroller  shall  have  paid  to 
each  and  every  creditor  of  such  association,  not  including 
shareholders  who  are  creditors  of  such  association,  whose  claim 


103 

or  claims  as  such  creditor  shall  have  been  proved,  or  allowed 
as  therein  prescribed,  the  full  amount  of  such  claims  and  all 
expenses  of  the  receivership,  and  the  redemption  of  the  circu- 
lating notes  of  such  association  shall  have  been  provided  for 
by  depositing  lawful  money  of  the  United  States  with  the 
Treasurer  of  the  United  States,  the  Comptroller  of  the  Cur- 
rency shall  call  a  meeting  of  the  shareholders  of  such  associa- 
tion by  giving  notice  thereof  for  thirty  days  in  a  newspaper 
published  in  the  town,  city,  or  county  where  the  business  of 
such  association  was  carried  on,  or  if  no  newspaper  is  there 
published,  in  the  newspaper  published  nearest  thereto,  at  which 
meeting  the  shareholders  shall  elect  an  agent,  voting  by  ballot, 
in  person  or  by  proxy,  each  share  of  stock  entitling  the  holder 
to  one  vote;  and  when  such  agent  shall  have  received  votes 
representing  at  least  a  majority  of  the  stock  in  value  and  num- 
ber of  shares,  and  when  any  of  the  shareholders  of  the  associ- 
ation shall  have  executed  and  filed  a  bond  to  the  satisfaction 
of  the  Comptroller  of  the  Currency,  conditioned  for  the  pay- 
ment and  discharge  in  full  of  any  and  every  claim  that  may 
hereafter  be  proved  and  allowed  against  such  association  by 
and  before  a  competent  court,  and  for  the  faithful  performance 
and  discharge  of  all  and  singular  the  duties  of  such  trust,  the 
Comptroller  and  the  receiver  shall  thereupon  transfer  and  de- 
liver to  such  agent  all  the  undivided  or  uncollected  or  other 
assets  and  property  of  such  association  then  remaining  in  the 
hands  or  subject  to  the  order  or  control  of  said  Comptroller 
and  said  receiver,  or  either  of  them;  and  for  this  purpose,  said 
Comptroller  and  said  receiver  are  hereby  severally  empowered 
to  execute  any  deed,  assignment,  transfer,  or  other  instrument 
in  writing  that  may  be  necessary  and  proper;  whereupon  the 
said  Comptroller  and  the  said  receiver  shall,  by  virtue  of  this 
Act,  be  discharged  and  released  from  any  and  all  liabilities  to 
such  association,  and  to  each  and  all  of  the  creditors  and  share- 
holders thereof;  and  such  agent  is  hereby  authorized  to  sell, 
compromise,  or  compound  the  debts  due  to  such  association 
upon  the  order  of  a  competent  court  of  record  or  of  the  United 
States  Circuit  Court  for  the  district  where  the  business  of  the 
association  was  carried  on.  Such  agent  shall  hold,  control, 
and  dispose  of  the  assets  and  property  of  any  association  which 


104 

he  may  receive  as  hereinbefore  provided  for  the  benefit  of  the 
shareholders  of  such  association  as  they,  or  a  majority  of  them 
in  value  or  number  of  shares,  may  direct,  distributing  such 
assets  and  property  among  such  shareholders  in  proportion  to 
the  shares  held  by  each;  and  he  may,  in  his  own  name,  or  in 
the  name  of  such  association,  sue  and  be  sued,  and  do  all 
other  lawful  acts  and  things  necessary  to  finally  settle  and  dis- 
tribute the  assets  and  property  in  his  hands.  In  selecting  an 
agent  as  hereinbefore  provided,  administrators  or  executors  of 
deceased  shareholders  may  act  and  sign  as  the  decedent  might 
have  done  if  living,  and  guardians  may  so  act  and  sign  for 
their  ward  or  wards. 

This  section  provides  for  disposition  of  assets  of  National  banking  associations 
placed  in  the  hands  of  receivers,  remaining  after  all  creditors  other  than  stock- 
holders have  been  paid  in  full.  They  are  to  be  turned  over  to  an  agent  of  the 
stockholders  for  the  benefit  of  the  latter.     (See,  also,  Section  5236,  page  67.) 

180.  Sale  of  Stock  of  Shareholder  not  Paying  Assessment. 

Section  4. — That  the  last  clause  of  section  fifty-two  hun- 
dred and  five  of  said  statutes  is  hereby  amended  by  adding  to 
the  said  section  the  following  proviso : 

"And provided,  That  if  any  shareholder  or  shareholders  of 
such  bank  shall  neglect  or  refuse,  after  three  months'  notice, 
to  pay  the  assessment,  as  provided  in  this  section,  it  shall  be 
the  duty  of  the  board  of  directors  to  cause  a  sufficient  amount 
of  the  capital  stock  of  such  shareholder  or  shareholders  to  be 
sold  at  public  auction  (after  thirty  days'  notice  shall  be  given 
by  posting  such  notice  of  sale  in  the  office  of  the  bank,  and 
by  publishing  such  notice  in  a  newspaper  of  the  city  or  town 
in  which  the  bank  is  located,  or  in  a  newspaper  published 
nearest  thereto,)  to  make  good  the  deficiency;  and  the  balance, 
if  any,  shall  be  returned  to  such  delinquent  shareholder  or 
shareholders. ' ' 

See  Section  5205,  page  4*7. 

181.  Stamping  Counterfeit  Notes. 
Section  5. — That  all  United  States  officers  charged  with  the 
receipt  or  disbursement  of  public  moneys,  and  all  officers  of 
National  banks,  shall  stamp  or  write  in  plain  letters  the  word 
1 '  counterfeit, "  "  altered, "  or  "  worthless, ' '  upon  all  fraudulent 
notes  issued  in  the  form  of,  and  intended  to  circulate  as  money 


i°5 

which  shall  be  presented  at  their  places  of  business  ;  and  if 
such  officers  shall  wrongfully  stamp  any  genuine  note  of  the 
United  States,  or  of  the  National  banks,  they  shall,  upon  pre- 
sentation, redeem  such  notes  at  the  face  value  thereof. 

182.  Savings  Banks.  &c  to  make  Reports. 

Section  6. — That  all  savings  banks  or  savings  and  trust 
companies  organized  under  authority  of  any  Act  of  Congress 
shall  be,  and  are  hereby,  required  to  make,  to  the  Comptroller 
of  the  Currency,  and  publish,  all  the  reports  which  National 
banking  associations  are  required  to  make  and  publish  under 
the  provisions  of  sections  fifty-two  hundred  and  eleven,  fifty- 
two  hundred  and  twelve,  and  fifty-two  hundred  and  thirteen 
of  the  Revised  Statutes,  and  shall  be  subject  to  the  same  pen- 
alties for  failure  to  make  or  publish  such  reports  as  are  therein 
provided  ;  which  penalties  may  be  collected  by  suit  before  any 
court  of  the  United  States  in  the  district  in  which  said  savings 
banks  or  savings  and  trust  companies  may  be  located.  And 
all  savings  or  other  banks  now  organized,  or  which  shall  here- 
after be  organized,  in  the  District  of  Columbia,  under  any  Act 
of  Congress,  which  shall  have  capital  stock  paid  up  in  whole 
or  in  part,  shall  be  subject  to  all  the  provisions  of  the  Revised 
Statutes,  and  of  all  Acts  of  Congress  applicable  to  National 
banking  associations,  so  far  as  the  same  may  be  applicable  to 
such  savings  or  other  banks  :  Provided,  That  such  savings 
banks  now  established  shall  not  be  required  to  have  a  paid-in 
capital  exceeding  one  hundred  thousand  dollars. 

See  Sections  5211-5213,  pages  50,  51. 

Extract  from  an  Act  approved  March  i,  1879. 
183.  Abating  Semi-Annual  Duty  of  Insolvent  Banks. 

That  whenever  and  after  any  bank  has  ceased  to  do  business 
by  reason  of  insolvency  or  bankruptcy,  no  tax  shall  be  assessed 
or  collected,  or  paid  into  the  Treasury  of  the  United  States, 
on  account  of  such  bank,  which  shall  diminish  the  assets 
thereof  necessary  for  the  full  payment  of  all  its  depositors  ; 
and  such  tax  shall  be  abated  from  such  National  banks  as  are 
found  by  the  Comptroller  of  the  Currency  to  be  insolvent  ; 
and  the  Commissioner  of  Internal  Revenue,  when  the  facts 


io6 

shall  so  appear  to  him,  is  authorized  to  remit  so  much  of  said 
tax  against  insolvent  State  and  savings  banks  as  shall  be  found 
to  affect  the  claims  of  their  depositors. 

Johnston  v.  United  States,  Court  of  Claims  Reports,  volume  17,  page  178. 

An  Act  approved  February  14th,  1880. 

184.    Conversion   of   National  Gold  Banks. 

That  any  National  gold  bank  organized  under  the  provisions 
of  the  laws  of  the  United  States,  may,  in  the  manner  and  sub- 
ject to  the  provisions  prescribed  by  section  fifty-one  hundred 
and  fifty-four  of  the  Revised  Statutes  of  the  United  States,  for 
the  conversion  of  banks  incorporated  under  the  laws  of  any 
State,  cease  to  be  a  gold  bank,  and  become  such  an  association 
as  is  authorized  by  Section  fifty-one  hundred  and  thirty-three, 
for  carrying  on  the  business  of  banking,  and  shall  have  the  same 
powers  and  privileges,  and  shall  be  subject  to  the  same  duties, 
responsibilities,  and  rules,  in  all  respects,  as  are  by  law  pre- 
scribed for  such  associations  :  Provided,  That  all  certificates 
of  organization  which  shall  be  issued  under  this  act  shall  bear 
the  date  of  the  original  organization  of  each  bank  respectively 
as  a  gold  bank. 

All  the  existing  gold  banks  have  either  gone  out  of  existence  or  have  been  con- 
verted into  ordinary  National  banking  associations  under  this  Act. 

An  Act  approved  February  26th,  1881. 

185.  Verification  of  Returns  of  National  Banks. 

That  the  oath  or  affirmation  required  by  section  fifty-two  hun- 
dred and  eleven  of  the  Revised  Statutes,  verifying  the  returns 
made  by  National  banks  to  the  Comptroller  of  the  Currency, 
when  taken  before  a  notary  public  properly  authorized  and 
commissioned  by  the  State  in  which  said  notary  resides  and 
the  bank  is  located,  or  any  other  officer  having  an  official  seal, 
authorized  in  such  State  to  administer  oaths,  shall  be  a  suffi- 
cient verification  as  contemplated  by  said  section  fifty-two  hun- 
dred and  eleven:  Provided,  That  the  officer  administering  the 
oath  is  not  an  officer  of  the  bank. 

See  Section  5211,  page  50. 


IOJ 


An  Act  approved  July  12th,  1882. 
186.   To  Extend  Corporate  Existence,  &e. 

That  any  National  banking  association  organized  under  the 
Acts  of  February  twenty-fifth,  eighteen  hundred  and  sixty- 
three,  June  third,  eighteen  hundred  and  sixty-four,  and  Febru- 
ary fourteenth,  eighteen  hundred  and  eighty,  or  under  sections 
fifty-one  hundred  and  thirty-three,  fifty-one  hundred  and  thirtv- 
four,  fifty-one  hundred  and  thirty-five,  fifty-one  hundred  and 
thirty-six,  and  fifty-one  hundred  and  fifty-four  of  the  Revised 
Statutes  of  the  United  States,  may,  at  any  time  within  the 
two  years  next  previous  to  the  date  of  the  expiration  of  its 
corporate  existence  under  present  law,  and  with  the  approval 
of  the  Comptroller  of  the  Currency,  to  be  granted  as  herein- 
after provided,  extend  its  period  of  succession  by  amending  its 
articles  of  association  for  a  term  of  not  more  than  twenty 
years  from  the  expiration  of  the  period  of  succession  named 
in  said  articles  of  association,  and  shall  have  succession  for 
such  extended  period,  unless  sooner  dissolved  by  the  act  of 
shareholders  owning  two-thirds  of  its  stock,  or  unless  its  fran- 
chise becomes  forfeited  by  some  violation  of  law,  or  unless 
hereafter  modified  or  repealed. 

Section  2. — That  such  amendment  of  said  articles  of  asso- 
ciation shall  be  authorized  by  the  consent  in  writing  of  share- 
holders owning  not  less  than  two-thirds  of  the  capital  stock  of 
the  association;  and  the  board  of  directors  shall  cause  such 
consent  to  be  certified  under  the  seal  of  the  association,  by  its 
president  or  cashier,  to  the  Comptroller  of  the  Currency,  ac- 
companied by  an  application  made  by  the  president  or  cashier 
for  the  approval  of  the  amended  articles  of  association  by  the 
Comptroller;  and  such  amended  articles  of  association  shall 
not  be  valid  until  the  Comptroller  shall  give  to  such  associa- 
tion a  certificate,  under  his  hand  and  seal,  that  the  association 
has  complied  with  all  the  provisions  required  to  be  complied 
with,  and  is  authorized  to  have  succession  for  the  extended 
period  named  in  the  amended  articles  of  association. 

See  manner  of  carrying  out  the  provisions  of  these  sections,  on  page  1 30,  this 
work. 


io8 


187.  Special  Examination  of  Extended  Banks. 
Section  3. — That  upon  the  receipt  of  the  application  and 
certificate  of  the  association  provided  for  in  the  preceding  sec- 
tion, the  Comptroller  of  the  Currency  shall  cause  a  special 
examination  to  be  made,  at  the  expense  of  the  association,  to 
determine  its  condition ;  and  if  after  such  examination  or 
otherwise  it  appears  to  him  that  said  association  is  in  a  satis- 
factory condition,  he  shall  grant  his  certificate  of  approval 
provided  for  in  the  preceding  section,  or  if  it  appears  that  the 
condition  of  said  association  is  not  satisfactory,  he  shall  with- 
hold such  certificate  of  approval. 

Upon  receipt  of  the  application  and  papers,  they  are  examined  in  the  Comptroller's 
office,  and  if  found  satisfactory  the  association  is  notified  that  the  papers  are  placed 
on  file,  and  that  the  examination  required  by  this  section  will  be  made  in  due  course. 
The  examination  is  usually  made  shortly  before  the  date  of  expiration  of  first  period 
•of  succession,  and  as  soon  as  the  examiner's  report  is  received.  If  satisfactory,  the 
certificate  approving  the  extension  is  issued  a  few  days  before  the  date  of  the  ex- 
piration. This  certificate  of  approval  is  required  to  be  published  by  regulation  of 
the  Comptroller's  office. 

188.  Privileges,  Liabilities,  &c,  of  Extended  Banks;  Jurisdiction 

of  Suits.  * 

Section  4. — That  any  association  so  extending  the  period 

of  its  succession  shall  continue  to  enjoy  all  the  rights  and 

privileges  and  immunities  granted,  and  shall  continue  to  be 

subject  to  all  the  duties,  liabilities,  and  restrictions  imposed 

by  the  Revised  Statutes  of  the  United  States  and  other  Acts 

having  reference  to  National  banking  associations,  and  it  shall 

continue  to  be  in  all  respects  the  identical  association  it  was 

before  the  extension  of  its  period  of  succession  :  Provided, 

however,  That  the  jurisdiction  for  suits  hereafter  brought  by 

or  against  any  association  established  under  any  law  providing 

for  National  banking  associations,  except  suits  between  them 

and  the  United  States,  or  its  officers  and  agents,  shall  be  the 

same  as,  and  not  other  than,  the  jurisdiction  for  suits  by  or 

against  banks  not  organized  under  any  law  of  the  United  States 

which  do  or  might  do  banking  business  where  such  National 

banking  associations  ma)7  be  doing  business  when  such  suits 

may  be  begun.     And  all  laws  and  parts  of  laws  of  the  United 

*See  Act  March  3,  1887,  115  E. 


109 

States  inconsistent  with   this  proviso  be,  and  the  same  are 
hereby,  repealed. 

The  provisions  of  this  section  in  reference  to  the  jurisdiction  of  the  courts  have 
been  fully  treated  under  Section  380,  page  84. 

189.  Withdrawal  of  Shareholders;  Preference  in  Allotment. 

Section  5. — That  when  any  National  banking  association 
has  amended  its  articles  of  association  as  provided  in  this  Act, 
and  the  Comptroller  has  granted  his  certificate  of  approval, 
any  shareholder  not  assenting  to  such  amendment  may  give 
notice  in  writing  to  the  directors,  within  thirty  days  from  the 
date  of  the  certificate  of  approval,  of  his  desire  to  withdraw 
from  said  association,  in  which  case  he  shall  be  entitled  to  re- 
ceive from  said  banking  association  the  value  of  the  shares  so 
held  by  him,  to  be  ascertained  by  an  appraisal  made  by  a  com- 
mittee of  three  persons,  one  to  be  selected  by  such  shareholder, 
one  by  the  directors,  and  the  third  by  the  first  two ;  and  in 
case  the  value  so  fixed  shall  not  be  satisfactory  to  any  such 
shareholder,  he  may  appeal  to  the  Comptroller  of  the  Currency, 
who  shall  cause  a  reappraisal  to  be  made,  which  shall  be  final 
and  binding ;  and  if  said  reappraisal  shall  exceed  the  value 
fixed  by  said  committee,  the  bank  shall  pay  the  expenses  of 
said  reappraisal,  and  otherwise  the  appellant  shall  pay  said 
expenses ;  and  the  value  so  ascertained  and  determined  shall 
be  deemed  to  be  a  debt  due,  and  be  forthwith  paid,  to  said 
shareholder,  from  said  bank ;  and  the  shares  so  surrendered 
and  appraised  shall,  after  due  notice,  be  sold  at  public  sale, 
within  thirty  days  after  the  final  appraisal  provided  in  this 
section  :  Provided,  That  in  the  organization  of  any  banking 
association  intended  to  replace  any  existing  banking  associ- 
ation, and  retaining  the  name  thereof,  the  holders  of  stock 
in  the  expiring  association  shall  be  entitled  to  preference  in 
the  allotment  of  the  shares  of  the  new  association  in  propor- 
tion to  the  number  of  shares  held  by  them  respectively  in  the 
expiring  association. 

190.  Extended  Banks— Old  &  New  Notes :  Lawful  Money  Deposit. 

Section  6. — That  the  circulating  notes  of  any  association 

so  extending  tbe  period  of  its  succession,  which  shall  have 

been  issued  to  it  prior  to  such  extension,  shall  be  redeemed  at 


no 

the  Treasury  of  the  United  States,  as  provided  in  section  three 
of  the  Act  of  June  twentieth,  eighteen  hundred  and  seventy- 
four,  entitled  "An  Act  fixing  the  amount  of  United  States  notes, 
providing  for  redistribution  of  National  bank  currency,  and 
for  other  purposes, ' '  and  such  notes  when  redeemed  shall  be 
forwarded  to  the  Comptroller  of  the  Currency  and  destroyed, 
as  now  provided  by  law;  and  at  the  end  of  three  years  from 
the  date  of  the  extension  of  the  corporate  existence  of  each 
bank  the  association  so  extended  shall  deposit  lawful  money 
with  the  Treasurer  of  the  United  States  sufficient  to  redeem 
the  remainder  of  the  circulation  which  was  outstanding  at  the 
date  of  its  extension,  as  provided  in  sections  fifty-two  hundred 
and  twenty-two,  fifty-two  hundred  and  twenty-four,  and  fifty- 
two  hundred  and  twenty-five  of  the  Revised  Statutes;  and  any 
gain  that  may  arise  from  the  failure  to  present  such  circulating 
notes  for  redemption  shall  inure  to  the  benefit  of  the  United 
States;  and  from  time  to  time,  as  such  notes  are  redeemed  or 
lawful  money  deposited  therefor  as  provided  herein,  new  cir- 
culating notes  shall  be  issued  as  provided  for  by  this  act,  bear- 
ing such  devices,  to  be  approved  by  the  Secretary  of  the  Treas- 
ury, as  shall  make  them  readily  distinguishable  from  the  cir- 
culating notes  heretofore  issued :  Provided,  however,  That  each 
banking  association  which  shall  obtain  the  benefit  of  this  Act 
shall  reimburse  to  the  Treasury  the  cost  of  preparing  the  plate 
or  plates  for  such  new  circulating  notes  as  shall  be  issued  to  it. 

191.  Requirements  of  Banks  not  Extending. 

Section  7. — That  National  banking  associations  whose  cor- 
porate existence  has  expired,  or  shall  hereafter  expire,  and 
which  do  not  avail  themselves  of  the  provisions  of  this  Act, 
shall  be  required  to  comply  with  the  provisions  of  sections 
fifty-two  hundred  and  twenty-one  and  fifty-two  hundred  and 
twenty-two  of  the  Revised  Statutes  in  the  same  manner  as  if 
the  shareholders  had  voted  to  go  into  liquidation,  as  provided 
in  section  fifty-two  hundred  and  twenty  of  the  Revised  Statutes; 
and  the  provisions  of  sections  fifty-two  hundred  and  twenty- 
four  and  fifty-two  hundred  and  twenty-five  of  the  Revised  Stat- 
utes shall  also  be  applicable  to  such  associations,  except  as 
modified  by  this  Act;  and  the  franchise  of  such  association  is 


Ill 

hereby  extended  for  the  sole  purpose  of  liquidating  their  affairs 
until  such  affairs  are  finally  closed. 

Blanks  are  sent  to  expiring  associations  to  enable  them  to  give  the  notice  to  the 
Comptroller's  office  required  by  Section  5222.  Such  expiring  associations  must, 
within  six  months  from  the  date  of  their  expiration,  deposit  lawful  money  to  retire 
their  circulation. 

192.  Minimum  Bonds  of  Banks  of  $150,000  Capital  or  Less,  &c. 

Section  8. — That  National  banks  now  organized,  or  here- 
after organized,  having  a  capital  of  one  hundred  and  fifty  thou- 
sand dollars  or  less,  shall  not  be  required  to  keep  on  deposit,  or 
deposit  with  the  Treasurer  of  the  United  States,  United  States 
bonds  in  excess  of  one-fourth  of  their  capital  stock  as  security 
for  their  circulating  notes,  but  such  banks  shall  keep  on  de- 
posit, or  deposit  with  the  Treasurer  of  the  United  States,  the 
amount  of  bonds  as  herein  required;  and  such  of  those  banks 
having  on  deposit  bonds  in  excess  of  that  amount  are  author- 
ized to  reduce  their  circulation  by  the  deposit  of  lawful  money, 
as  provided  by  law:  Provided,  That  the  amount  of  such  cir- 
culating notes  shall  not  exceed  in  any  case  ninety  per  centum 
of  the  par  value  of  the  bonds  deposited  as  herein  provided : 
Provided  further,  That  the  National  banks  which  shall  here- 
after make  deposits  of  lawful  money  for  the  retirement  in  full 
of  their  circulation  shall,  at  the  time  of  their  deposit,  be  assessed 
for  the  cost  of  transporting  and  redeeming  their  notes  then 
outstanding  a  sum  equal  to  the  average  cost  of  the  redemption 
of  National  bank  notes  during  the  preceding  year,  and  shall 
thereupon  pay  such  assessment;  and  all  National  banks  which 
have  heretofore  made,  or  shall  hereafter  make,  deposits  of  law- 
ful money  for  the  reduction  of  their  circulation,  shall  be  as- 
sessed and  shall  pay  an  assessment  in  the  manner  specified  in 
section  three  of  the  Act  approved  June  twentieth,  eighteen 
hundred  and  seventy-four,  for  the  cost  of  transporting  and  re- 
deeming their  notes  redeemed  from  such  deposits  subsequently 
to  June  thirtieth,  eighteen  hundred  and  eighty-one. 

193.  Retiring  Circulation  and  Reissue. 

Section  9. — That  any  National  Banking  association  now 
organized,  or  hereafter  organized,  desiring  to  withdraw  its  cir- 
culating notes,  upon  a  deposit  of  lawful  money  with  the  Treas- 


112 

urer  of  the  United  States,  as  provided  in  section  four  of  the 
Act  of  June  twentieth,  eighteen  hundred  and  seventy-four, 
entitled  "An  Act  fixing  the  amount  of  United  States  notes, 
providing  for  a  redistribution  of  National  bank  currency,  and 
for  other  purposes,"  or  as  provided  in  this  act,  is  authorized  to 
deposit  lawful  money  and  withdraw  a  proportionate  amount 
of  the  bonds  held  as  security  for  its  circulating  notes  in  the 
order  of  such  deposits;  and  no  National  bank  which  makes 
any  deposit  of  lawful  money  in  order  to  withdraw  its  circu- 
lating notes  shall  be  entitled  to  receive  any  increase  of  its  cir- 
culation for  the  period  of  six  months  from  the  time  it  made 
such  deposit  of  lawful  money  for  the  purpose  aforesaid:  Pro- 
vided, That  not  more  than  three  millions  of  dollars  of  lawful 
money  shall  be  deposited  during  any  callendar  month  for  this 
purpose:  And  provided  further,  That  the  provisions  of  this 
section  shall  not  apply  to  bonds  called  for  redemption  by  the 
Secretary  of  the  Treasury,  nor  to  the  withdrawal  of  circulating 
notes  in  consequence  thereof. 

194.  Amount  of  Circulation  on  United  States  Bonds. 
Section  io. — That  upon  a  deposit  of  bonds  as  described  by 
sections  fifty-one  hundred  and  fifty-nine  and  fifty-one  hundred 
and  sixty,  except  as  modified  by  section  four  of  an  Act  entitled 
"An  Act  fixing  the  amount  of  United  States  notes,  providing 
for  a  redistribution  of  the  National  bank  currency,  and  for 
other  purposes,"  approved  June  twentieth,  eighteen  hundred 
and  seventy-four,  and  as  modified  by  section  eight  of  this  act, 
the  association  making  the  same  shall  be  entitled  to  receive 
from  the  Comptroller  of  the  Currency  circulating  notes  of  dif- 
ferent denominations,  in  blank,  registered  and  countersigned 
as  provided  by  law,  equal  in  amount  to  ninety  per  centum  of 
the  current  market  value  not  exceeding  par,  of  the  United 
States  bonds  so  transferred  and  delivered,  and  at  no  time  shall 
the  total  amount  of  such  notes  issued  to  any  such  association 
exceed  ninety  per  centum  of  the  amount  at  such  time  actually 
paid  in  of  its  capital  stock;*  and  the  provisions  of  section 
fifty-one  hundred  and  seventy-one  and  fifty-one  hundred  and 
seventy-six  of  the  Revised  Statutes  are  hereby  repealed. 

*See  also  proviso  in  Section  8,  page  74. 


"3 


195.  Concerning  Three-Per-cent.  Bonds. 

Section  ii. — That  the  Secretary  of  the  Treasury  is  here- 
by authorized  to  receive  at  the  Treasury  any  bonds  of  the 
United  States  bearing  three  and  a  half  per  centum  interest, 
and  to  issue  in  exchange  therefor  an  equal  amount  of  registered 
bonds  of  the  United  States  of  the  denominations  of  fifty,  one 
hundred,  five  hundred,  one  thousand,  and  ten  thousand  dollars, 
of  such  form  as  he  may  prescribe,  bearing  interest  at  the  rate 
of  three  per  centum  per  annum,  payable  quarterly  at  the  Treas- 
ury of  the  United  States.  Such  bonds  shall  be  exempt  from 
all  taxation  by  or  under  State  authority,  and  be  payable  at  the 
pleasure  of  the  United  States:  Provided,  That  the  bonds  herein 
authorized  shall  not  be  called  in  and  paid  so  long  as  any  bonds 
of  the  United  States  heretofore  issued  bearing  a  higher  rate  of 
interest  than  three  per  centum,  and  which  shall  be  redeemable 
at  the  pleasure  of  the  United  States,  shall  be  outstanding  and 
uncalled.  The  last  of  the  said  bonds  originally  issued  under 
this  Act,  and  their  substitutes,  shall  be  first  called  in,  and  this 
order  of  payment  shall  be  followed  until  all  shall  have  been 
paid. 

196.   Gold  and  Silver  Certificates ;  Clearing  House  Restrictions. 

Section  12. — That  the  Secretary  of  the  Treasury  is  author- 
ized and  directed  to  receive  deposits  of  gold  coin  with  the 
Treasurer  or  Assistant  Treasurers  of  the  United  States,  in  sums 
not  less  than  twenty  dollars,  and  to  issue  certificates  therefor 
in  denominations  of  not  less  than  twenty  dollars  each,  corre- 
sponding with  the  denominations  of  United  States  notes.  The 
coin  deposited  for  or  representing  the  certificates  of  deposit 
shall  be  retained  in  the  Treasury  for  the  payment  of  the  same 
on  demand.  Said  certificates  shall  be  receivable  for  customs, 
taxes,  and  all  public  dues,  and  when  so  received  may  be  reis- 
sued ;  and  such  certificates,  as  also  silver  certificates,  when 
held  by  any  National  banking  association,  shall  be  counted  as 
part  of  its  lawful  reserve ;  and  no  National  banking  associa- 
tion shall  be  a  member  of  any  clearing-house  in  which  such 
certificates  shall  not  be  receivable  in  the  settlement  of  clearing- 
8 


ii4 

house  balances  :  Provided,  That  the  Secretary  of  the  Treasury 
shall  suspend  the  issue  of  such  gold  certificates  whenever  the 
amount  of  gold  coin  and  gold  bullion  in  the  Treasury  reserved 
for  the  redemption  of  United  States  notes  falls  below  one  hun- 
dred millions  of  dollars  ;  and  the  provisions  of  Section  fifty- 
two  hundred  and  seven  of  the  Revised  Statutes  shall  be  appli- 
cable to  the  certificates  herein  authorized  and  directed  to  be 
issued. 

197.  Penalty  for  Illegal  Issue  of  Certified  Checks. 
Section  13. — That  any  officer,  clerk,  or  agent  of  any  Na- 
tional banking  association  who  shall  wilfully  violate  the  pro- 
visions of  an  Act  entitled  "An  Act  in  reference  to  certifying 
checks  by  National  banks,"  approved  March  third,  eighteen 
hundred  and  sixty-nine,  being  Section  fifty-two  hundred  and 
eight  of  the  Revised  Statutes  of  the  United  States,  or  who 
shall  resort  to  any  device,  or  receive  any  fictitious  obligation, 
direct  or  collateral,  in  order  to  evade  the  provisions  thereof,  or 
who  shall  certify  checks  before  the  amount  thereof  shall  have 
been  regularly  entered  to  the  credit  of  the  dealer  upon  the 
books  of  the  banking  association,  shall  be  deemed  guilty  of 
a  misdemeanor,  and  shall,  on  conviction  thereof  in  any  circuit 
or  district  court  of  the  United  States,  be  fined  not  more  than 
five  thousand  dollars,  or  shall  be  imprisoned  not  more  than 
five  years,  or  both,  in  the  discretion  of  the  court. 

198.  Congress  may  Amend. 
Section  14. — That  Congress  may  at  any  time  amend,  alter, 
or  repeal  this  Act  and  the  Acts  of  which  this  is  amendatory. 

In  further  reference  to  the  workings  of  this  Act  the  following  quotation  from  the 
last  annual  report  of  the  Comptroller  of  the  Currency  is  given  : 

"  The  provisions  of  the  Act  for  the  extension  of  the  corporate  existence  of  Na- 
tional banks  in  the  main  appear  to  be  admirably  suited  for  that  purpose.  Those 
of  the  first  and  second  sections,  which  provide  that  the  period  of  succession  may  be 
extended  by  simply  amending  the  articles  of  association  by  the  consent  in  writing 
of  shareholders  owning  not  less  than  two-thirds  of  the  capital  stock,  are  simple  and 
easily  carried  out  by  the  banks. 

"Section  3,  which  provides  for  a  special  examination  of  the  association  in  order 
to  determine  its  condition,  is  also  well  adapted  for  the  purpose. 

"  The  part  of  Section  4  which  provides  that  the  extended  bank  shall  continue  to 
be  in  all  respects  the  identical  association  it  was  before  the  extension  of  its  period 
of  succession  prevents  any  break  or  disturbance  in  its  business,  enables  the  bank 
to  retain  its  surplus  fund,  and  is  especially  useful  in  the  matter  of  any  litigation  for 
collection  of  assets,  title  to  property,  &c. 

"  It  would,  however,  appear  that  some  of  the  provisions  of  Section  5  might  be 
amended  with  advantage  to  the  public. 


"5 

"  Provision  is  made  to  ascertain  the  value  of  shares  of  non-assenting  shareholders, 
by  an  appraisal  to  be  made  by  a  committee  of  three  persons,  one  to  be  selected  by 
the  non-assenting  shareholder,  oue  by  the  directors,  and  a  third  by  the  tirst  two. 
But  if  the  bank  does  not  heed  the  notice  of  withdrawal  and  declines  to  appoint  a 
person  to  serve  on  the  committee  of  appraisal,  there  is  no  penalty  for  such  neglect, 
and  apparently  the  shareholder's  only  remedy  is  by  a  suit  in  some  court  of  compe- 
tent jurisdiction.  I  therefore  conclude  that  some  provision  should  be  made  for  the 
enforcement  of  this  section.  Provision  is  also  made,  in  case  the  value  of  the  shares 
fixed  by  the  committee  of  appraisal  is  not  satisfactory  to  the  shareholder,  that  he 
may  appeal  to  the  Comptroller  of  the  Currency,  who  shall  cause  a  reappraisal  to  be 
made,  which  shall  be  final  and  binding.  No  provision  is,  however,  made  for  an 
appeal  on  the  part  of  the  bank,  where  the  valuation  fixed  by  the  committee  is  not 
satisfactory  to  it.  I  have  to  recommend,  therefore,  that  the  section  be  amended  to 
obviate  this  defect. 

"  Provision  is  further  made  that  after  the  appraised  value  has  been  paid  to  the 
shareholder,  as  provided  by  law.  and  the  shares  surrendered,  the  same  shall,  after 
due  notice,  be  sold  at  public  sale  within  thirty  days  after  the  final  appraisal.  It 
appears  that  in  many  cases  thirty  days  is  not  sufficient  time  for  the  bank  to  realize 
a  fair  price  for  shares  which  it  is  thus  compelled  under  the  law  to  purchase,  and 
inasmuch  as  section  5201  of  the  Revised  Statutes  provides  that  stock  purchased  or 
acquired  to  prevent  loss  upon  a  debt  previously  contracted  in  good  faith  may  be 
sold  at  any  time  within  six  months  from  the  date  of  its  purchase,  at  public  or  pri- 
vate sale,  it  would  seem  that  the  law  should  grant  at  least  as  long  a  period  for  the 
sale  of  the  stock  which  an  association  is  compelled  to  take  from  a  retiring  stock- 
holder under  the  Act  of  extension,  and  the  Comptroller  recommends  an  amendment 
to  this  effect. 

•  •  It  is  respectfully  submitted  that  more  than  the  three  years  granted  in  Section 
6  should  be  granted  within  which  to  deposit  lawful  money  to  retire  the  remainder 
of  the  circulation  outstanding  at  the  date  of  extension.  If  this  period  should  be 
extended  to  six  years  the  necessary  deposit  would  then  be  comparatively  small.  In 
the  natural  course  of  redemption  the  outstanding  circulation  of  old  design  of  ex- 
tended associations  is  constantly  being  decreased,  as  all  such  notes  redeemed  are 
retired  without  regard  to  their  fitness  for  circulation,  notes  of  a  new  design,  as  pro- 
vided by  law.  being  issued  in  their  place. 

•  If  the  only  object  of  Section  G  is  to  enable  the  United  States  to  gain  the  benefit 
from  lost  or  destroyed  notes,  this  object  might  have  been  accomplished  by  simple 
enactment  to  this  effect,  without  the  expense  of  the  issuance  of  new  notes  and  the 
deposit  of  lawful  money. 

"  The  extension  of  the  franchises  of  expiring  associations  for  the  sole  purpose  of 
liquidating  their  affairs  until  closed,  as  provided  for  in  Section  7,  appears  to  an- 
swer its  purpose. 

"At  this  date  but  two  reappraisals  have  been  made  of  the  stock  of  non-assenting 
shareholders,  under  Section  5,  by  the  Comptroller  of  the  Currency." 

Extract  from  an  Act  approved  March  3d,  18S3. 
199.  Repealing  Tax  on  Capital  and  Deposits  of  Banks. 
That  the  taxes  herein  specified  imposed  by  the  laws  now  in 
force  be,  and  the  same  are  hereby,  repealed,  as  hereinafter  pro- 
vided, namely:  On  capital  and  deposits  of  banks,  bankers,  and 
National  banking  associations,  except  such  taxes  as  are  now  due 
and  payable  ;  and  on  and  after  the  first  day  of  July,  eighteen 
hundred  and  eighty-three,  the  stamp  tax  on  bank  checks, 
drafts,  orders,  and  vouchers. 

See  decision  Attorney  General  of  the  United  States.  May  13th,  1883. 


115  A 

An  Act  approved  March  29th,  1886. 
200.  Receivers  to  Protect  Equities  in  Real  Estate,  &c. 
Section  i.  That  whenever  the  receiver  of  any  National 
bank  duly  appointed  by  the  Comptroller  of  the  Currency,  and 
who  shall  have  duly  qualified  and  entered  upon  the  discharge 
of  his  trust,  shall  find  it  in  his  opinion  necessary,  in  order  to 
fully  protect  and  benefit  his  said  trust,  to  the  extent  of  any  and 
all  equities  that  such  trust  may  have  in  any  property,  real  or 
personal,  by  reason  of  any  bond,  mortgage,  assignment,  or 
other  proper  legal  claim  attaching  thereto,  and  which  said 
property  is  to  be  sold  under  any  execution,  decree  of  fore- 
closure, or  proper  order  of  any  court  of  jurisdiction,  he  may 
certify  the  facts  in  the  case,  together  with  his  opinion  as  to 
the  value  of  the  property  to  be  sold,  and  the  value  of  the 
equity  his  said  trust  may  have  in  the  same,  to  the  Comptroller 
of  the  Currency,  together  with  a  reqtiest  for  the  right  and 
authority  to  use  and  employ  so  much  of  the  money  of  said 
trust  as  may  be  necessary  to  purchase  such  property  at  such 
sale. 

Under  Section  5234  of  the  Revised  Statutes  of  the  United  States,  the  receiver  of  a 
National  bank  is  required  to  pay  over  all  money  collected  by  him  to  the  Treasurer 
of  the  United  States.  It  often  occurred  that  real  estate  of  the  bank  or  other  assets 
might  be  incumbered  by  mortgages  or  claims.  The  law  of  March  29th,  1886,  was 
passed  to  provide  a  way  in  which  these  incumbrances  might  be  removed,  by  paying 
them  off  with  money  derived  from  the  collection  of  other  assets.  The  first  section 
provides  for  bringing  the  necessity  of  action  to  the  knowledge  of  the  Comptroller. 

201.  Receiver's  Report  must  be  Approved. 
Section  2.  That  such  request,  if  approved  by  the  Comp- 
troller of  the  Currency,  shall  be,  together  with  the  certificate 
of  facts  in  the  case,  and  his  recommendation  as  to  the  amount 
of  money  which,  in  his  judgment,  should  be  so  used  and 
employed,  submitted  to  the  Secretary  of  the  Treasury  ;  and  if 
the  same  shall  likewise  be  approved  by  him,  the  request  shall 
be  by  the  Comptroller  of  the  Currency  allowed,  and  notice 
thereof,  with  copies  of  the  request,  certificate  of  facts,  and 
indorsement  of  approvals,  shall  be  filed  with  the  Treasurer  of 
the  United  States. 

This  section  requires  the  Comptroller  to  make  certificate  of  the  facts,  the  amount 
of  money  required,  &c,  to  the  Secretary  of  the  Treasury.  If  the  Secretary  approves 
the  matter,  all  the  papers  are  turned  over  to  the  Treasurer,  so  that  he  has  evidence 
before  him  of  the  nature  of  the  draft  about  to  be  drawn  upon  the  funds  deposited 
with  him  bv  the  receiver. 


II5B 

202.  Payment  for  Property  to  be  Made  by  Comptroller. 
Section  3.  That  whenever  any  such  request  shall  be  allow- 
ed as  hereinbefore  provided,  the  said  Comptroller  of  the  Cur- 
rency shall  be,  and  is,  empowered  to  draw  upon  and  from  such 
funds  of  any  such  trust  as  may  be  deposited  with  the  Treasurer 
of  the  United  States  for  the  benefit  of  the  bank  in  interest  to 
the  amount  as  may  be  recommended  and  allowed  and  for  the 
purpose  for  which  such  allowance  was  made:  Provided,  kow- 
ever,  That  all  payments  to  be  made  for  or  on  account  of  the 
purchase  of  any  such  property  and  under  any  such  allowance 
shall  be  made  by  the  Comptroller  of  the  Currency  direct,  with 
the  approval  of  the  Secretary  of  the  Treasury,  for  such  pur- 
pose only  and  in  such  manner  as  he  may  determine  and  order. 

This  section  provides  that  the  money  necessary  for  the  purchase  or  relief  of  any 
property,  after  the  transaction  shall  have  been  allowed  by  the  Secretary  of  the 
Treasury,  shall  be  drawn  by  the  Comptroller  of  the  Currency.  The  proviso  is  to 
prevent  the  Comptroller  from  using  the  money  for  any  other  purpose  than  that 
specifically  allowed. 

Ax  Act  approved  May  1st,  1886. 
203.  Increase  of  Capital  Stock. 
Section  i.  That  any  National  banking  association  may, 
with  the  approval  of  the  Comptroller  of  the  Currency,  by  the 
vote  of  shareholders  owning  two-thirds  of  the  stock  of  such 
association,  increase  its  capital  stock,  in  accordance  with  exist- 
ing laws,  to  any  sum  approved  by  the  said  Comptroller,  not- 
withstanding the  limit  fixed  in  its  original  articles  of  associa- 
tion and  determined  by  said  Comptroller  ;  and  no  increase  of 
the  capital  stock  of  an}-  National  banking  association,  either 
within  or  beyond  the  limit  fixed  in  its  original  articles  of  asso- 
ciation, shall  be  made  except  in  the  manner  herein  provided. 

See  Section  5142.  (page  1G.)  under  which  it  is  provided  that  the  maximum  limit 
of  increase  of  capital  must  be  fixed  and  determined  in  the  original  articles  of  a--  - 
ciatioD  by  the  Comptroller.  The  Attorney-General  decided  that  the  maximum 
limit  having  once  been  fixed,  could  not  be  changed  except  by  act  of  Congress. 
The  Act  of  May  1st.  1886,  is  a  general  act:  gives  the  power  to  the  Comptroller  to 
change  the  maximum  limit  of  increase  of  capital,  and  also  makes  a  change  in  the 
manner  of  such  increase  which  could  previously  be  made  by  the  directors  without 
consulting  the  stockholders 

204.   Change  of  Name  and  Location. 
Section  2.    That   any  National    banking  association  may 
change  its  name  or  the  place  where  its  operations  of  discount 
and  deposit  are  to  be  carried  on  to  any  other  place  within  the 


115  c 

same  State  not  more  than  thirty  miles  distant,  with  the  ap- 
proval of  the  Comptroller  of  the  Currency,  by  the  vote  of 
shareholders  owning  two-thirds  of  the  stock  of  such  associa- 
tion. A  duly-authenticated  notice  of  the  vote  and  of  the  new 
name  or  location  selected  shall  be  sent  to  the  office  of  the 
Comptroller  of  the  Currency  ;  but  no  change  of  name  or  loca- 
tion shall  be  valid  until  the  Comptroller  shall  have  issued  his 
certificate  of  approval  of  the  same. 

This  section  provides  for  change  of  the  name  and  location  of  a  National  bank 
with  the  approval  of  the  Comptroller.  Previously  this  could  not  be  effected  by  any 
bank  without  a  special  act  of  Congress. 

205.  Liabilities,  &c,  under  Old  Name. 
Section  3.    That   all  debts,  liabilities,  rights,  provisions, 
and  powers  of  the  association  under  its  old  name  shall  devolve 
upon  and  inure  to  the  association  under  its  new  name. 

206.  New  Name  or  Location  not  to  Release  from  Liabilities,  &c. 
Section  4.  That  nothing  in  this  Act  contained  shall  be  so 
construed  as  in  any  manner  to  release  any  National  banking 
association  under  its  old  name  or  at  its  old  location  from  any 
liability,  or  affect  any  action  or  proceeding  in  law  in  which 
said  association  may  be  or  become  a  party  or  interested. 

An  Act  approved  March  3d,  1887. 
207.  Requirements  to  become  Reserve  City. 
Section  i.  That  whenever  three-fourths  in  number  of  the 
National  banks  located  in  any  city  of  the  United  States  having 
a  population  of  fifty  thousand  people  shall  make  application 
to  the  Comptroller  of  the  Currency,  in  writing,  asking  that 
the  name  of  the  city  in  which  such  banks  are  located  shall  be 
added  to  the  cities  named  in  Sections  fifty-one  hundred  and 
ninety-one  and  fifty-one  hundred  and  ninety-two  of  the  Re- 
vised Statutes,  the  Comptroller  shall  have  authority  to  grant 
such  request,  and  every  bank  located  in  such  city  shall  at  all 
times  thereafter  have  on  hand,  in  lawful  money  of  the  United 
States,  an  amount  equal  to  at  least  twenty-five  per  centum  of 
its  deposits,  as  provided  in  Sections  fifty-one  hundred  and 
ninety-one  and  fifty-one  hundred  and  ninety-five  of  the  Re- 
vised Statutes. 

The  Comptroller  requires  that  the  application  of  the  banks  shall  in  each  case  be 
regularly  approved  by  the  action  of  its  board  of  directors.  The  office  furnishes 
blanks  for  use  in  making  such  application. 


II5D 

208.  Requirements  to  become  a  Central  Reserve  City. 
Section  2.  That  whenever  three-fourths  in  number  of  the 
National  banks  located  in  any  city  of  the  United  States  having 
a  population  of  two  hundred  thousand  people  shall  make  appli- 
cation to  the  Comptroller  of  the  Currency,  in  writing,  asking 
that  such  city  may  be  a  central  reserve  city,  like  the  city  of 
New  York,  in  which  one-half  of  the  lawful-money  reserve  of 
the  National  banks  located  in  other  reserve  cities  may  be 
deposited,  as  provided  in  Section  fifty-one  hundred  and  ninety- 
five  of  the  Revised  Statutes,  the  Comptroller  shall  have  author- 
ity, with  the  approval  of  the  Secretary  of  the  Treasury,  to 
grant  such  request,  and  every  bank  located  in  such  city  shall 
at  all  times  thereafter  have  on  hand,  in  lawful  money  of  the 
United  States,  twenty-five  per  centum  of  its  deposits,  as  pro- 
vided in  Section  fifty-one  hundred  and  ninety-one  of  the 
Revised  Statutes. 

It  is  somewhat  doubtful  whether  a  dissenting  bank  can,  by  the  votes  of  three- 
fourths  of  the  associations  in  the  place  it  is  located,  be  compelled  to  keep  more 
reserve  or  in  a  different  manner  than  the  law  required  it  to  do  at  the  date  of  its 
organization. 

The  Comptroller  of  the  Currency  holds,  that  Congress  having  reserved  the  power 
to  amend,  alter,  or  repeal  the  banking  laws,  this  amendment  coming  under  that 
reservation,  no  bank  concerned  can  claim  exemption  therefrom  on  the  ground  of 
charter  rights. 

209.  Redemption  of  TJ.  S.  Notes  at  San  Francisco. 
Section  3.  That  Section  three  of  the  Act  of  January  four- 
teenth, eighteen  hundred  and  seventy-five,  entitled  "An  Act 
to  provide  for  the  resumption  of  specie  payments, ' '  be,  and  the 
same  is  hereby,  amended  by  adding  after  the  words  "New 
York"  the  words  "and  the  city  of  San  Francisco,  California." 

This  section  permits  legal-tender  notes  presented  in  sums  of  not  less  than  fifty 
dollars  at  the  sub-treasury  at  San  Francisco  to  be  redeemed  there  in  coin,  which  by 
Section  12  of  the  Act  of  June  12th,  1882,  is  interpreted  to  mean  gold  coin. 

Extract  from  an  Act  approved  March  3d,  1887. 
210.  National  Banks  deemed  Citizens  of  States  in  which  Located. 
Section  4.  That  all  National  banking  associations  estab- 
lished under  the  laws  of  the  United  States  shall,  for  the 
purposes  of  all  actions  by  or  against  them,  real,  personal,  or 
mixed,  and  all  suits  in  equity,  be  deemed  citizens  of  the  States 
in  which  they  are  respectively  located  ;  and  in  such  cases  the 
Circuit  and  District  Courts  shall  not  have  jurisdiction  other 


115  E 

than  such  as  they  would  have  in  cases  between  individual 
citizens  of  the  same  State. 

By  this.  National  banks  become  citizens  of  the  States  in  which  they  are  located, 
and  can  sue  and  be  sued  precisely  the  same  as  citizens.  This  may  modify  the  effect 
of  the  proviso  in  Section  4  of  the  Act  of  July  12th,  1882,  (page  108,)  which  placed 
National  banks  on  a  footing  with  State  banks,  unless  the  latter  are,  by  the  law  or 
decisions  of  the  courts  in  the  State  where  they  are  located,  declared  to  be  citizens. 

211.    Limitation  of  Banking  under  Territorial  Law. 

[Revised  Statutes,  Title  XXIII.] 

Section  1889.  The  legislative  assemblies  of  the  several 
Territories  shall  not  grant  private  charters  or  especial  privi- 
leges, but  they  may,  by  general  incorporation  acts,  permit 
persons  to  associate  themselves  together  as  bodies  corporate 
for  mining,  manufacturing,  and  other  industrial  pursuits,  or 
the  construction  or  operation  of  railroads,  wagon  roads,  irri- 
gation ditches,  and  the  colonization  and  improvements  of  lands 
in  connection  therewith,  or  for  colleges,  seminaries,  churches, 
libraries,  or  any  benevolent,  charitable,  or  scientific  association. 

Extract  from  an  Act  approved  July  30,  1886. 

Section  5.  That  section  eighteen  hundred  and  eighty-nine, 
title  twenty-three,  of  the  Revised  Statutes  of  the  United  States 
be  amended  to  read  as  follows  : 

"The  legislative  assemblies  of  the  several  Territories  shall 
not  grant  private  charters  or  special  privileges,  but  they  may, 
by  general  incorporation  acts,  permit  persons  to  associate  them- 
selves together  as  bodies  corporate  for  mining,  manufacturing, 
and  other  industrial  pursuits,  and  for  conducting  the  business 
of  insurance,  banks  of  discount  and  deposit  (but  not  of  issue), 
loan,  trust,  and  guarantee  associations,  and  for  the  construction 
or  operation  of  rail-roads,  wagon-roads,  irrigating  ditches,  and 
the  colonization  and  improvements  of  lands  in  connection 
therewith,  or  for  colleges,  seminaries,  churches,  libraries,  or 
any  other  benevolent,  charitable,  or  scientific  association." 


INFORMATION 


HOW  TO  PROCEED  IN 


Organizing  National  Banks  either  de  novo  or  by  Conversion 
from  State  Banks  and  Private  Banks,  with  Forms  and  In- 
structions;  also  in  regard  to  the  Increase  a7id  Reduction 
of  Capital,  Voluntary  Liquidation,  and  Extension  of  Cor- 
porate Existe7ice,  with  Suggestions  for  their  Management, 
and  a  General  Form  for  By-Laws,  Compiled  from  "Instruc- 
tions and  Suggestions  in  Regard  to  the  Organization  and 
Management  of  National  Banks,"  Issued  by  the  Hon.  Hugh 
McCulloch,  Comptroller  of  the  Currency,  soon  after  the  Or- 
ganization of  the  National  Banking  System  in  1864. 


Information  as  to  Organization. 

1. — The  first  step  to  be  taken  for  the  organization  of  a  Na- 
tional bank  is  to  apply  to  the  Comptroller  of  the  Currency  for 
his  consent. 

The  application  should  be  made  by  letter,  and  should  specify 
the  title  desired,  as  it  must  be  approved  by  the  Comptroller, 
the  locality,  capital,  and  names  of  at  least  five  persons  who 
will  be  stockholders  of  the  proposed  organization,  and  should 
also  have  a  favorable  endorsement,  or  a  letter  recommending 
that  it  be  granted,  from  the  Member  of  Congress  for  the  dis- 
trict in  which  the  bank  is  to  be  located,  together  with  similar 
letters  from  gentlemen  of  well-known  character  and  reputa- 
tion, vouching  for  the  responsibility  of  the  parties,  and  that 
the  proposed  bank  is  likely  to  be  useful  to  the  community. 

2. — On  approving  the  application,  the  Comptroller  will  fur- 
nish all  necessary  forms,  in  blank,  to  be  used  in  perfecting  the 
organization,  which  contain  all  requisite  instructions  for  their 
proper  execution. 

3. — After  an  application  to  organize  a  National  bank  has 
been  approved  by  the  Comptroller  of  the  Currency,  the  title 
selected  will  be  held  for  the  applicants  until  the  organization 
is  completed,  provided  it  be  within  sixty  days  from  the  time 

(116) 


"7 

the  same  is  approved.  An  extension  of  time  will  no  doubt  be 
granted  for  good  reasons. 

4. — The  organization  papers  having  been  duly  executed, 
(and  it  is  suggested  that  they  be  executed  in  duplicate,  so  that 
the  bank  may  be  enabled  to  have  originals  of  these  important 
papers,)  filed  with  the  Comptroller,  and  at  least  one-half  of  the 
capital  paid  in  and  duly  certified  by  certificate  of  officers  and 
directors,  (see  Section  5168,  page  15,  and  page  121  for  form  of 
certificate,)  the  next  step  is  to  deposit  the  amount  of  United 
States  bonds  required  by  law  to  perfect  the  organization; 
whereupon  the  Comptroller  will,  if  satisfied  that  the  law  has 
been  properly  complied  with,  and  that  the  bank  has  been 
organized  in  good  faith  for  legitimate  objects,  give  to  it  his 
"Certificate  of  Authority"  to  commence  business,  for  which 
preparations  should  have  previously  been  made  by  providing 
a  suitable  banking  office,  with  a  secure  vault  or  safe,  and  all 
necessary  books  and  papers.  The  "  Certificate  of  Authority" 
must  be  published  for  sixty  days,  in  a  newspaper  where  the 
bank  is  located. 

5. — The  names  of  the  persons  executing  the  organization 
papers  of  a  bank  should  be  written  in  full,  and  the  signatures 
to  the  different  papers  must  be  the  same  in  all  cases,  and  sim- 
ilarly written ;  and  the  papers  must  be  executed  before  a  no- 
tary public  or  judge  of  a  court  of  record,  and  the  acknowledg- 
ment authenticated  by  the  seal  of  the  notary  or  court. 

6. — Inasmuch  as  the  laws  of  the  various  States  differ  greatly 
as  to  the  rights  of  married  women  with  respect  to  their  estates 
and  property,  and  as  to  the  effect  of  covenants  and  agreements 
made  by  them,  and  as  to  forms  of  acknowledgment  of  instru- 
ments executed  by  them,  they  should  not  be  made  parties  to 
the  organization  papers  of  National  banks,  in  order  to  avoid 
the  serious  questions  that  may  arise  as  to  the  legality  of  or- 
ganizations founded  upon  papers  executed  in  part  by  them. 
They  can  become  stockholders  of  a  bank,  if  it  be  desired, 
by  transfer  of  stock  to  them  after  the  organization  shall  be 
perfected. 

7. — Under  the  Act  of  July  12th,  1882,  any  National  bank 
having  a  capital  of  $150,000,  or  less,  is  not  required  to  keep  on 
deposit  with  the  Treasurer  of  United  States  bonds  in  excess 


n8 

of  one-quarter  of  its  capital  stock,  as  security  for  circulation; 
therefore  a  bank  of  $50,000  capital  can  organize  on  deposit  of 
$12,500  in  United  States  bonds,  and  receive  circulation  to  the 
extent  of  ninety  per  cent,  of  face  of  bonds.  Any  National 
bank  may  reduce  its  bonds  deposited  with  the  Treasurer  of 
the  United  States  to  $50,000,  without  regard  to  the  amount 
of  its  capital. 

8. — A  National  bank  cannot  be  organized  with  a  less  capital 
than  $100,000,  without  the  especial  approval  of  the  Secretary 
of  the  Treasury,  and  then  only  in  places  having  less  than  6000 
inhabitants;  and  in  cities  with  population  of  50,000,  the  capi- 
tal must  be  at  least  $200,000. 

9. — The  Comptroller  of  the  Currency  authorizes  the  payment 
to  the  bank  of  the  interest  on  bonds  deposited  by  it. 

10. — When  a  bank  wishes  an  agent  or  correspondent  to  col- 
lect its  interest-checks,  a  letter  must  be  addressed  to  the  Reg- 
ister of  the  Treasury,  Washington,  D.  C,  directing  that  the 
checks  be  forwarded  to  such  agent,  and  a  resolution  of  the 
board  of  directors,  authenticated  by  the  seal  of  the  bank,  au- 
thorizing such  agent  to  endorse  the  checks,  must  be  filed  with 
the  First  Auditor  of  the  Treasury,  Washington,  D.  C. 

11. — The  interest  on  all  the  United  States  registered  bonds, 
except  the  "  currency  sixes,"  (Pacific  R.  R.  bonds,)  is  paid  by 
check  to  the  order  of  the  bank  owning  the  bonds,  and  payable 
at  any  United  States  A  ssistant  Treasury  or  U.  S.  depository. 

12. — When  a  National  bank  desires  to  withdraw  any  surplus 
of  bonds  it  may  have  on  deposit  as  security  for  circulation,  or 
to  substitute  other  bonds  for  those  previously  deposited  for 
that  purpose,  a  form  of  authority  for  such  transaction  will  be 
furnished  on  application  to  the  Comptroller  of  the  Currency, 
to  whom  the  receipts  of  the  Treasurer  of  the  United  States  for 
the  bonds  to  be  withdrawn  must  be  returned  with  the  request 
for  withdrawal. 

13. — If  a  National  bank  has  occasion  to  sell  United  States 
registered  stock  issued  in  its  name,  a  form  of  authority  for  an 
officer  of  the  bank  or  an  attorney  to  make  the  necessary  assign- 
ments will  be  furnished  on  application  to  the  Comptroller  of 
the  Currency. 

14. — The  Act  of  Congress  approved  June  20th,  1874,  requires 


II9 

National  banks  organized  after  that  date  to  reimburse  to  the 
Treasury  the  cost  of  engraving  the  plates  for  their  circulating 
notes;  and  the  Act  of  Jul}'  12th,  1882,  provides  that  banks 
whose  charters  are  extended  under  said  Act  shall  also  reim- 
burse the  Treasury  the  cost  of  preparing  the  new  plates  required 
for  such  banks.  No  charge  is  made  for  paper,  or  for  printing 
of  circulation. 

For  banks  of  $50,000  capital  we  advise  a  plate  of  10,  10,  io> 
20.     The  cost  of  the  plates  is  as  follows  : 

Plate    5,      5,     5,    5 $75 

"     10,    10,  10,  20 75 

"     50.  IO° 50 

We  refer  also,  in  connection  with  this  subject,  to  our  com- 
ments upon  Sections  5133,  5134,  5135,  and  5136  on  pages  5,  6, 
and  7  of  this  work. 

Organizing  Blanks. 
The  following  are  copies  of  forms  furnished  by  Comptrol- 
ler's office.  That  office  prefers  that  banks  should  use  the 
blanks  furnished  by  it,  and  therefore  it  is  not  worth  while  to 
make  out  the  papers  in  manuscript.  Legally,  however,  organ- 
izers of  banks  can  insert  any  provisions  they  wish,  not  incon- 
sistent with  law,  although  they  may  not  be  in  the  office  blanks: 

Form  for  Articles  of  Association. 

For  the  purpose  of  organizing  an  association  to  carry  on  the  business  of  banking, 
under  the  laws  of  the  United  States,  the  undersigned  subscribers  for  the  stock  of 
the  association  hereinafter  named  do  enter  into  the  following  articles  of  association : 

First.  The  name  and  title  of  this  association  shall  be  "The ." 

Second.  The  place  where  its  banking  house  or  office  shall  be  located,  and  its 
operations  of  discount  and  deposit  carried  on,  and  its  general  business  conducted, 
shall  be . 

Third.  The  board  of  directors  shall  consist  of shareholders.     The  first 

meeting  of  the  shareholders  for  the  election  of  directors  shall  be  held  at ,  on 

the ,  or  at  such  other  place  and  time  as  a  majority  of  the  undersigned  share- 
holders may  direct. 

Fourth.  The  regular  annual  meetings  of  the  shareholders  for  the  election  of 
directors  shall  be  held  at  the  banking  house  of  this  association  on  the  second  Tues- 
day of  January  of  each  year ;  but  if  no  election  shall  be  held  on  that  day,  it  may 
be  held  on  any  other  day,  according  to  the  provisions  of  Section  5149  of  the  Re- 
vised Statutes ;  and  all  elections  shall  be  held  according  to  such  regulations  as  may 
be  prescribed  by  the  board  of  directors,  not  inconsistent  with  the  aforesaid  provis- 
ions of  the  said  Section  5149  of  the  Revised  Statutes. 


120 

Fifth.  The  capital  stock  of  the  association  shall  be thousand  dollars,  to 

be  divided  into  shares  of  one  hundred  dollars  each  ;  but  the  capital  may  be  increased, 
according  to  the  provisions  of  Section  5142  of  the  Revised  Statutes,  to  any  sum  not 

exceeding thousand  dollars  ;  and  in  case  of  the  increase  of  the  capital  of  the 

association,  each  shareholder  shall  have  the  privilege  of  subscribing  for  such  num- 
bers of  shares  of  the  proposed  increase  of  the  capital  stock  as  he  may  be  entitled  to 
according  to  the  number  of  shares  owned  by  him  before  the  stock  is  increased. 

Sixth.  The  board  of  directors,  a  majority  of  whom  shall  be  a  quorum  to  do  busi- 
ness, shall  elect  one  of  their  number  to  be  president  of  this  association,  who  shall 
hold  his  office  (unless  he  shall  be  disqualified,  or  be  sooner  removed  by  a  two-thirds 
vote  of  all  the  members  of  the  board)  for  the  term  for  which  he  was  elected  a 
director ;  and  they  shall  have  power  to  elect  a  vice-president,  who  shall  also  be  a 
member  of  the  board  of  directors,  and  who  shall  be  authorized,  in  the  absence  or 
inability  of  the  president  from  any  cause,  to  perform  all  acts  and  duties  pertaining 
to  the  office  of  president  except  such  as  the  president  only  is  authorized  by  law  to 
perform,  and  to  elect  or  appoint  a  cashier  and  such  other  officers  and  clerks  as  may 
be  required  to  transact  the  business  of  the  association  ;  to  fix  the  salaries  to  be  paid 
to  them,  and  continue  them  in  office,  or  to  dismiss  them,  as,  in  the  opinion  of  a 
majority  of  the  board,  the  interests  of  the  association  may  demand. 

They  shall  also  have  power  to  define  the  duties  of  the  officers  and  clerks  of  the 
association  ;  to  require  bonds  from  them  and  to  fix  the  penalty  thereof;  to  regulate 
the  manner  in  which  elections  of  directors  shall  be  held;  and  to  appoint  judges  of 
the  elections ;  to  provide  for  an  increase  of  the  capital  of  the  association,  and  to 
regulate  the  manner  in  which  such  increase  shall  be  made ;  and,  generally,  to  do 
and  perform  all  the  acts  that  it  may  be  legal  for  a  board  of  directors  to  do  under 
the  Revised  Statutes  aforesaid ;  and  they  shall  also  have  the  power  to  make  all  by- 
laws that  it  may  be  proper  and  convenient  for  them  to  make,  not  inconsistent  with 
law,  for  the  general  regulation  of  the  business  of  the  association  and  the  manage- 
ment and  administration  of  its  affairs. 

Seventh.  This  association  shall  continue  for  the  period  of  twenty  years  from  the 
date  of  the  execution  of  its  organization  certificate,  unless  sooner  placed  in  volun- 
tary liquidation  by  the  act  of  its  shareholders  owning  at  least  two-thirds  of  its  stock, 
or  otherwise  dissolved  by  authority  of  law. 

Eighth.  These  articles  of  association  may  be  changed  or  amended  at  any  time 
by  shareholders  owning  a  majority  of  the  stock  of  the  association,  in  any  manner 
not  inconsistent  with  law ;  and  the  board  of  directors  or  any  three  shareholders 
may  call  a  meeting  of  the  shareholders  for  this  or  any  other  purpose  not  inconsist- 
ent with  law,  by  publishing  notice  thereof  for  thirty  days  in  a  newspaper  published 
in  the  town,  city,  or  county  where  the  bank  is  located,  or  by  notifying  the  share- 
holders in  writing. 

In  witness  whereof,  we  have   hereunto  set  our   hands,  this  day  of , 

eighteen  hundred  and  eighty  . 

1.  I  certify  that  the  articles  of  association  of  the were  executed  in  dupli- 
cate, and  that  one  of  the  instruments  so  executed  is  the  foregoing ;  and  that  the 
other,  in  all  respects  like  the  foregoing,  is  on  file  with  said  bank. 

,  Cashier  or  President. 

,  188-. 


121 

Instead  of  providing,  as  in  the  third  article,  for  the  election 
of  the  first  board  of  directors,  the  names  of  the  directors 
might  be  given  in  the  article.  This,  when  the  stockholders 
are  agreed  at  the  time  as  to  the  persons  who  are  to  constitute 
the  directors,  might  be  much  more  convenient  than  to  hold 
an  election.  In  this  event  the  third  article  should  read  as 
follows : 

The  board  of  directors  shall  consist  of stockholders,  and  the  following  per- 
sons [here  insert  their  names]  are  hereby  appointed  directors  of  this  association  to 
hold  their  offices  as  such  until  the  regular  annual  election  takes  place  pursuant  to 
the  fourth  article  of  these  articles  of  association,  and  until  their  successors  are 
chosen  and  qualified. 

Form  of  Organization  Certificate. 

We,  the  undersigned,  whose  names  are  specified  in  article  fourth  of  this  certifi- 
cate, having  associated  ourselves  for  the  purpose  of  organizing  an  association  for 
carrying  on  the  business  of  banking,  under  the  laws  of  the  United  States,  do  make 
and  execute  the  following  organization  certificate  : 

First.  The  name  of  the  association  shall  be  The . 

Second.  The  said  association  shall  be  located  in  the of ,  county  of 

,  and  State  of ,  where  its  operations  of  discount  and  deposit  are  to  be 


carried  on. 

Thibd.  The  capital  stock  of  this  association  shall  be dollars,  ($ ,) 

and  the  same  shall  be  divided  into shares  of  one  hundred  dollars  each. 

Fourth.  The  name  and  residence  of  each  of  the  shareholders  of  this  association, 
with  the  number  of  shares  held  by  each,  are  as  follows  : 


Name. 


Residence. 


No.  of  Shares. 


Fifth.  This  certificate  is  made  in  order  that  we  may  avail  ourselves  of  the  ad- 
vantages of  the  aforesaid  laws  of  the  United  States. 

In  witness  whereof,  we  have  hereunto  set  our  hands,  this day  of ,  188-. 


State  of 


County  of  ■ 


,}< 


On  this,  the day  of  — : ,  A.  D.  188-,  before  me,  a of ,  per- 
sonally came  ,  to  me  well  known,  who  severally  acknowledged  that  they 

executed  the  foregoing  certificate  for  the  purposes  therein  mentioned. 

Witness  my  hand  and  seal  of  office  the  day  aud  year  aforesaid. 


[seal  of  notary  or  court.] 


122 


Directors. 

After  the  execution  of  the  organization  certificate,  if  the  di- 
rectors are  not  designated  in  the  articles  of  association,  the 
stockholders  should  proceed  to  elect  directors  as  provided  in 
Section  5145,  who  should,  after  election,  take  oath  as  required 
by  Section  5147. 

Form  of  Joint  Oath  of  Directors. 
State  op  ,  1 


County  of 


We,  the  undersigned,  directors  of  the  ,  of ,  of  the  State  of 


do  each  of  us  solemnly  swear  that  we  are  citizens  of  the  United  States,  and  resi- 
dents of  the  State  of ,  and  that  we  will  severally,  so  far  as  the  duty  devolves 

on  us,  diligently  and  honestly  administer  the  affairs  of  said  bank ;  and  that  we  will 
not  knowingly  violate,  or  willingly  permit  to  be  violated,  any  of  the  provisions  of 
the  Revised  Statutes  of  the  United  States  under  which  this  bank  has  been  organized  ; 
and  that  each  of  us  is  the  bona-fide  owner,  in  his  own  right,  of  the  number  of  shares 
of  stock  required  by  said  Revised  Statutes,  subscribed  by  him  or  standing  in  his 
name  on  the  books  of  the  said  bank ;  and  that  the  same  is  not  hypothecated,  or  in 
any  way  pledged  as  security  for  any  loan  or  debt. 

Subscribed  and  sworn  to  this day  of ,  188-,  before  the  undersigned,  a 

of  said  county. 


Form  of  Proxy  for  use  at  Stockholders'  Meeting  for  Election  of 

Directors. 
I  do  hereby  constitute  and  appoint  ,  of  — — — ,  in  the  county  of 


and  State  of ,  my  lawful  proxy,  for  me  and  in  my  name  to  vote shares 

of  the  stock  of  the National  Bank  of ,  owned  by  me  and  standing  in 

my  name  on  the  books  of  said   bank,  at  the  annual  meeting  of  the  stockholders 

thereof  to  be  held   for  the  election  of  directors  on  the day  of  ,  A.  D. 

188-,  pursuant  to  law,  and  at  all  future  meetings  of  stockholders  which  shall  be 
held  for  a  similar  purpose  until  this  authority  shall  be   revoked,  hereby  ratifying 

and  confirming  whatsoever  the  said may  lawfully  do  by  virtue  hereof;    and 

I  hereby  revoke  and  annul  any  and  all  authority  heretofore  given  by  me,  authoriz- 
ing any  person  for  me,  or  in  my  name,  to  vote  my  stock  in  said  bank. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal  this day  of , 

A.  D.  188-. 


,  [l.  s.] 

Proxies  to  be  used  at  meetings  of  stockholders  held  for  other 
than  election  purposes  can  be  made  in  general  form  like  to  the 
above,  specifying  the  object  for  which  the  meeting  at  which 
they  are  to  be  used  is  to  be  held. 

No  officer,  clerk,  teller,  or  book-keeper  of  a  National  bank 


123 


can  legally  act  as  proxy  to  vote  any  of  its  stock,  but  directors 
who  are  not  executive  officers,  and  are  not  filling  any  of  the 
above-named  positions  in  their  bank,  can  act  when  properly 
authorized. 

See  comments  under  Section  5144,  page  18  of  this  work. 

Form  of  Certificate  of  Officers  and  Directors. 

The  undersigned, ,  president, ,  cashier,  and  

,  organized  under  the  sections  of  the  Revised 


directors  of  the 


Statutes  of  the  United  States,  approved  June  22,  1874,  which  authorize  the  organi- 
zation of  National  banking  associations,  and  of  subsequent  acts  in  addition  to  and 

amendatory  thereof,  do  hereby  certify  that dollars  have  been  paid  into  said 

bank,  on  account  of  its  capital  stock,  as  permanent  capital;  that  the  residence  of 
each  director,  and  the  amount  of  stock  of  which  each  director  is  the  bona  fide 
owner,  are  as  follows  : 


Name  of  Director. 


Place  of  Residence. 


Shares  of  Stock. 


And  that  this  bank  has  in  good  faith  complied  with  all  the  provisions  of  said 
Act  required  to  be  complied  with  before  receiving  authority  to  commence  the  busi- 
ness of  banking. 

,  President. 

,  ,  Cashier. 


Directors. 


State  of 


>ss: 


County  of  — 

On   this  day  of ,  188-,  before  the  undersigned,  a of 

,  personally  appeared ,  president, ,  cashier,  and 


directors  of  the 


-,  and   made  oath   that  the  foregoing 


certificate  and  the  matters  and  things  therein  set  forth  are  true  to  the  best  of  their 
knowledge  and  belief. 


Subscribed  and  sworn  to  before  me,  this 


day  of 


-,  188-. 


The  oath  of  a  majority  of  the  directors  of  an  association  is 
sufficient  for  this  purpose. 

Payment  of  Capital. 
The  certificate  of  officers  and  directors  is  the  certificate  of 
the  payment  of  the  first  instalment  of  the  capital.     The  five 


124 

remaining  instalments  must  be  paid  in  and  certified  to  the 
Comptroller,  one  on  each  successive  thirty  days  from  the  date 
of  the  Comptroller' 's  certificate  of  authority  to  co7nmence  business. 
The  form  usual  for  these  certificates  is  as  follows: 

Certificate  of  Payment  of  Capital  Stock. 

Bank, ,  188— 

Sir:  It  is  hereby  certified  that  the instalment,  amounting  to dollars, 

($ ,)  has  been  paid  in  on  account  of  the  capital  stock  of  the , 

making  the  total  amount  paid  in  on  the  capital  stock  of  this  bank  $ . 

[seal  of  bank.]  , 

Cashier. 
To  the  Comptroller  of  the  Currency, 

Washington,  D.  0. 

State  of ,         \     . 

County  of ,  j 

Subscribed  and  sworn  to  before  the  undersigned of  the  said  county,  this 

day  of ,  188-. 


N.  B. — Banks  are  requested  not  to  report  the  payment  of  any  one  instalment 
twice,  except  as  included  in  total  amount  paid  in. 

In  reference  to  the  legal  method  of  enforcing  the  payment 
of  subscriptions  to  capital  stock,  see  Section  5 141  Revised 
Statutes,  page  13  of  this  work. 

Conversion  of  State  Banks. 

For  law,  see  Section  5154,  page  24. 

As  an  indication  of  the  assent  of  stockholders  required,  they 
should  execute  the  following  paper,  which  should  be  made  in 
duplicate,  one  copy  to  be  filed  with  the  Comptroller  of  the 
Currency: 

Authority  of  Stockholders  to  Directors  for  the  Conversion  of  a  State 
into  a  National  Bank. 
We,  the  undersigned,  stockholders  of  the   [here  insert  the  name  of  the  bank], 

located  in  the of ,  county  of and  State  of ,  having  a 

capital  of dollars,  do  hereby  authorize  and  empower  the  directors  thereof  to 

change  and  convert  said  bank  into  a  National  banking  association,  under  the  general 
banking  laws  of  the  United  States,  and  according  to  the  provisions  of  Section  5154, 
Revised  Statutes  of  the  United  States,  and  we  do  also  authorize  the  said  directors, 
or  a  majority  thereof,  to  make  and  execute  the  articles  of  association  and  organiza- 
tion certificate  required  to  be  made  or  contemplated  by  said  laws,  and  also  to  make 
and  execute  all  other  papers  and  certificates,  and  to  do  all  acts  necessary  to  be  done 

to  convert  said  into  a  National  association,  and  also  to  do  and  perform  all 

such  acts  as  may  be  necessary  to  transfer  the  assets  of  every  description  and  char- 


125 

acter  of  said to  the  National  banking  association  into  which  it  is  to  be  con- 
verted, so  that  the  said  conversion  may  be  absolute  and  complete. 

And  we  do  hereby  assume,  and  authorize  the  said  directors  to  assume,  as  the  name 

of  the  National  banking  association  into  which  the  said  is  to  be  converted, 

41  The  [here  insert  the  name  of  the  association] ;"  and  we  do  hereby  appoint  [here 
insert  the  names  of  the  directors],  who  are  now  the  directors  of  the  said  [here  insert 
the  name  of  the  State  bank  about  to  be  converted],  to  be  directors  of  the  said  [here 
insert  the  name  of  the  association],  to  hold  their  offices  as  such  directors  until  the 
regular  annual  election  of  directors  is  held,  pursuant  to  the  provisions  of  said  laws, 
and  until  their  successors  are  chosen  and  qualified. 

And  we  do  hereby  authorize  the  said  directors  to  continue  in  office  the  officers  of 
the  said  [here  insert  the  name  of  the  State  bank  about  to  be  converted],  or  to 
appoint  or  select  others,  as  to  them  may  seem  best. 

In  witness  whereof,  we  have  hereunto  set  our  hands,  and  written  against  our 

names  the  number  of  shares  owned  by  us  respectively,  this day  of , 

A.  D.  18—. 


Names  of  Stockholders.  Stock  owned  by  each. 


The  directors,  thus  authorized,  may  then  proceed  to  execute 
articles  of  association  and  an  organization  certificate.  These 
are  similar  in  form  to  those  already  given,  only  being  modified 
inasmuch  as  they  are  executed  by  the  authorized  directors. 
Blanks  are  furnished  by  the  Comptroller's  office.  From  this 
point  there  will  no  difference  between  a  National  bank  con- 
verted from  a  State  bank  and  one  organized  de  novo  in  the 
papers  and  proceedings. 

Conversion  of  Private  Banks. 
There  is  nothing  in  the  National  banking  laws  which  will 
enable  a  private  bank  or  banking  firm  to  convert  into  a  Na- 
tional bank  in  the  same  manner  as  Section  5154  permits  the 
conversion  of  State  banks  organized  under  the  banking  laws 
of  the  several  States.  The  partners  or  owners  of  a  private 
bank  or  banking  firm  desiring  to  become  a  National  bank  can, 
however,  make  application  to  the  Comptroller  of  the  Cur- 
rency for  permission  to  organize  under  the  National  Banking- 
laws.  The  Comptroller  becoming  informed  that  the  applicants 
are  private  bankers  will  require  them  to  furnish  a  statement 
setting  forth  the  condition  of  their  institution.     If  they  ap- 


126 

plied  simply  as  citizens  desiring  to  organize  de  novo  this  re- 
quirement would  not  be  made.  The  Comptroller's  office  will 
not  permit  any  assets  or  liabilities  to  be  turned  over  directly 
to  the  National  bank.  The  latter  must  be  organized  as  a  new 
institution  in  good  faith.  Good  paper  or  other  good  assets  be- 
longing to  the  private  bankers  can  doubtless  be  taken  by  the 
National  bank  after  it  has  commenced  business ;  but  there 
must  be  technically  no  merging  of  the  one  into  the  other;  the 
line  between  the  two  institutions  must  be  a  decided  one.  The 
requirement  of  the  Comptroller,  that  private  bankers  applying 
as  such  to  organize  a  National  bank  shall  furnish  a  statement 
of  the  condition  of  their  private  institution,  seems  to  imply 
that  the  officer  believes  it  to  be  the  purpose  of  the  private 
bankers  to  avail  themselves  of  the  assets  of  the  private  bank  in 
starting  the  National  bank.  This  must  be  done,  however,  in 
due  and  legal  form.  The  good  assets  of  the  private  bank 
must  be  taken  by  the  directors  of  the  new  National  bank  as 
from  outside  parties.  Real  estate,  other  than  such  as  might  be 
required  by  the  new  bank  for  banking-house,  cannot  be  taken, 
nor  can  real  estate  or  mortgage  paper  become  an  asset  of  the 
new  institution.  An  examiner  is  always  sent  shortly  after  the 
organization  of  a  new  National  bank  to  report  on  the  character 
of  its  assets. 

If  the  assets  of  the  private  bank  are  good  there  can  be 
little  difficulty  in  securing  an  advance  of  money  upon  them, 
which  will  enable  the  owners  to  pay  up  their  subscriptions  to 
the  stock  of  the  National  bank  taken  by  them,  or  at  least  the 
fifty  per  centum  required  to  be  paid  in  of  such  stock  before  the 
National  bank  can  commence  business.  (See  Sections  5140 
and  5141  and  comments  thereon,  pages  13,  14.)  After  it  has 
commenced  business  it  can  purchase  the  assets,  &c. ,  as  it  will 
then  have  the  money  derived  from  payments  on  stock,  less 
such  portion  as  may  have  been  invested  in  United  States  bonds 
deposited  with  the  United  States  Treasurer,  in  lieu  of  which 
portion  it  will  also  have  in  due  time  its  circulating  notes. 


127 


GENERAL  FORM  FOR  BY-LAWS.* 


The  directors  of  every  National  bank  should  adopt  by-laws, 
which  must  be  consistent  with  the  Banking  laws,  for  the  gov- 
ernment and  conduct  of  the  business  of  their  bank,  and  should 
have  them  recorded  in  the  minute-book.  The  following  is 
submitted  as  a  suitable  form,  to  be  modified  according  to  cir- 
cumstances and  the  views  of  directors  : 

By-laws  of  the  \Jiere  insert  the  title  of  the  bank]  organized 
under  the  laws  of  the  United  States,  and  authorized  by  the 
Comptroller  of  the  Currency  to  carry  on  the  business  of 
banking. 

i. — The  regular  annual  meetings  of  stockholders  of  this  bank 
for  the  election  of  directors  and  for  the  transaction  of  other 
legitimate  business  shall  be  held  between  the  hours  of  ten 
o'clock  a.  m.  and  four  o'clock  p.  m.  on  the  day  specified  in  the 
articles  of  association,  and  the  thirty  days'  notice  of  the  time 
and  object  of  such  meetings  thereby  required  shall  be  given  by 
the  president,  vice  president,  or  cashier  by  publication  in  [here 
insert  name  of  paper  in  wliicJi  publication  is  to  be  made.]  The 
board  of  directors  shall,  within  one  month  previous  to  the  date 
fixed  for  such  meetings,  appoint  three  stockholders  to  be 
judges  of  the  election  for  directors,  who  shall  hold  and  conduct 
the  same,  and  who  shall,  under  their  hands,  notify  the  person 
acting  as  cashier  of  this  bank  of  the  result  thereof  as  soon  as 
ascertained,  and  of  the  names  of  the  directors-elect. 

2. — The  person  acting  as  cashier  shall  thereupon  cause  the 
returns  made  by  the  judges  of  election  to  be  recorded  upon  the 
minute-book  of  the  bank,  and  shall  notify  the  directors  chosen 
of  their  election,  and  of  the  time  for  them  to  meet  at  the  bank- 
ing-house for  the  organization  of  the  new  board.  If  at  the 
time  fixed  for  such  meetings  there  should  be  no  quorum  in  at- 
tendance, the  directors-elect  present  may  adjourn  from  time 
to  time  until  a  quorum  shall  be  obtained. 

3. — The  directors-elect  shall  meet  for  organization,  upon  the 

♦See  comments  upon  clause  G,  Section  513G,  page  7  of  this  work. 


128 

notification  given  in  accordance  with  law  2,  within  one  week 
from  the  time  of  their  election,  but  shall  not  do  any  business 
whatever  prior  to  qualifying  by  taking  the  oath  of  office  as 
required  by  law. 

4. — If  the  annual  election  for  directors  should  not  be  held 
on  the  day  fixed  by  the  articles  of  association,  the  directors  in 
office  shall  order  a  special  election,  of  which  notice  shall  be 
given,  judges  appointed,  and  returns  made  and  recorded  upon 
the  minute-book;  and  the  directors  chosen  thereat  shall  be 
certified  to  the  cashier,  and  notified  as  provided  by  laws  1 
and  2. 

5. — The  officers  of  this  bank  shall  be  a  president,  vice  presi- 
dent, cashier,  teller,  and  book-keeper,  and  such  other  officers 
as  may  be  required  from  time  to  time  for  the  prompt  and  or- 
derly transaction  of  its  business;  and  all  officers,  clerks,  and 
agents  shall  be  elected,  appointed,  or  employed  by  the  board 
of  directors,  or  with  the  consent  thereof,  and  their  several 
duties  may  be  prescribed  by  the  board. 

6. — The  president  shall  hold  his  office  for  the  current  year 
for  which  the  board  of  which  he  shall  be  a  member  was  elected, 
unless  he  shall  resign,  become  disqualified,  or  be  removed; 
and  any  vacancy  occurring  in  the  office  of  president  or  in  the 
board  of  directors  shall  be  filled  by  the  remaining  members. 

7. — The  cashier  and  the  subordinate  officers  and  clerks  shall 
be  appointed  to  hold  their  offices  respectively  during  the  pleas- 
ure of  the  board  of  directors. 

8. — The  cashier  of  this  bank  shall  be  responsible  for  all  the 
moneys,  funds,  and  valuables  of  the  bank,  and  shall  give  bond, 
with  security  to  be  approved  by  the  board,  in  the  penal  sum 
of dollars,  conditioned  for  the  faithful  and  honest  dis- 
charge of  his  duties  as  such  cashier,  and  that  he  will  faithfully 
apply  and  account  for  all  such  moneys,  funds,  and  valuables, 
and  deliver  the  same  to  the  order  of  the  board  of  directors  of 
this  bank,  or  to  the  person  or  persons  authorized  to  receive 
them. 

9. — The  president  of  this  bank  shall  be  responsible  for  all 
such  sums  of  money  and  property  of  every  kind  as  may  be 
intrusted  to  his  care  or  placed  in  his  hands  by  the  board  of 
directors  or  by  the  cashier,  or  otherwise  come  into  his  hands 


129 

as  president,  and  shall  give  bond,  with  security  to  be  approved 

by  the  board,  in  the  penal  sum  of dollars,  conditioned 

for  the  faithful  discharge  of  his  duties  as  such  president,  and 
that  he  will  faithfully  and  honestly  apply  and  account  for  all 
sums  of  money  and  other  property  of  this  bank  that  may  come 
into  his  hands  as  such  president,  and  pay  over  and  deliver  the 
same  to  the  order  of  the  board  of  directors,  or  to  any  other 
person  or  persons  authorized  by  the  board  to  receive  the  same. 

10. — The  teller  shall  be  responsible  for  all  such  sums  of 
money,  property,  and  funds  of  every  description  as  may  from 
time  to  time  be  placed  in  his  hands  by  the  cashier,  or  other- 
wise come  into  his  possession  as  teller,  and  shall  give  bond, 
with  security  to  be  approved  by  the  board  of  directors,  in  the 

penal  sum  of dollars,  conditioned  for  the  honest  and 

faithful  discharge  of  his  duties,  and  that  he  will  faithfully 
apply,  account  for,  and  pay  over  all  moneys,  property,  and 
funds  of  every  description  pertaining  to  this  bank  that  may 
come  into  his  hands  by  virtue  of  his  office  as  teller,  to  the  or- 
der of  the  board  of  directors,  or  to  such  person  or  persons  as 
ma)-  be  authorized  by  the  board  to  receive  the  same. 

ii. — The  bonds  of  the  officers  shall  be  placed  in  the  cus- 
tody of  a  stockholder  of  this  bank,  to  be  designated  b}'  the 
board  of  directors,  who  shall  not  be  one  of  the  bonded  offi- 
cers, to  be  surrendered  by  him  only  upon  the  order  of  the 
board. 

12. — The  impression  made  below  is  an  impression  of  the 
seal  adopted  by  the  board  of  directors  of  this  bank. 
\_Impression  of  Seal, .] 

13. — All  transfers  and  conveyances  of  real  estate  shall  be 
made  by  the  bank,  under  the  seal  thereof,  in  accordance  with 
the  orders  of  the  board  of  directors,  and  shall  be  signed  by  the 
president  or  cashier. 

14. — Whenever  an  increase  of  stock  shall  be  determined  upon 
in  accordance  with  the  articles  of  association  of  this  bank,  it 
shall  be  the  duty  of  the  board  of  directors  to  cause  all  the 
stockholders  to  be  notified  thereof,  and  a  subscription  to  be 
opened  therefor,  specifying  the  terms  of  payment  agreed  upon 
by  subscribers.     Each  stockholder  shall  be  entitled  to  subscribe 

9 


13° 

for  shares  of  the  new  stock  in  proportion  to  the  number  of 
shares  he  already  owns;  but  if  any  stockholder  shall  fail  to 
subscribe  for  such  new  stock  as  he  may  be  entitled  to,  or  to 
pay  his  subscription  according  to  agreement,  the  board  of  direct- 
ors shall  determine  what  disposition  shall  be  made  of  the  priv- 
ileges of  subscribing  for  the  new  stock  not  taken. 

15. — This  bank  shall  be  open  for  business  from o'clock 

A.  m.  to o'clock  p.  m.  each  day,  except  Sundays  and  days 

recognized  by  the  laws  of  this  State  as  holidays. 

16. — The  board  of  directors  of  this  bank  shall  hold  regular 
meetings  at  the  banking-house  for  the  transaction  of  business 

on of  each  week,  and  should  that  day  in  any  year  fall 

upon  a  holiday,  the  regular  meeting  for  that  week  shall  be  held 
on  such  other  day  as  the  directors  at  the  preceding  meeting 
may  order. 

The  board  may  also  hold  special  meetings  upon  the  call  of  the 
president,  cashier,  or  any  three  or  more  members,  and  when- 
ever there  shall  not  be  a  quorum  at  a  regular  or  special  meet- 
ing, the  members  present  may  adjourn  the  meeting  from  day 
to  day  until  a  quorum  shall  be  obtained;  and  any  meeting  may 
be  adjourned  from  time  to  time  by  a  vote  of  a  majority  of  a 
quorum  present,  but  no  business  except  adjournment  shall  be 
transacted  in  the  absence  of  a  quorum. 

17. — There  shall  be  a  committee,  to  be  known  as  the  ex- 
change committee,  consisting  of  the  president, directors, 

and  cashier,  who  shall  have  power  to  discount  and  purchase 
bills,  notes,  and  other  evidences  of  debt,  and  to  buy  and  sell 
bills  of  exchange;  and  who  shall,  at  each  regular  meeting  of 
the  board  of  directors,  make  a  report  of  all  bills,  notes,  and 
other  evidences  of  debt  discounted  and  purchased  by  them  for 
the  bank  since  their  last  previous  report. 

18. — The  board  of  directors  may  appoint  one  of  its  members 
or  an  officer  of  the  bank  to  act  as  clerk  at  its  meetings. 

19. — No  officer  or  clerk  of  this  bank  shall  pay  any  check 
drawn  upon  it,  or  pay  out  money  on  any  order,  unless  the 
drawer  of  such  check  or  order  shall,  at  the  time  of  the  presenta- 
tion thereof,  have  on  deposit  in  the  bank  funds  sufficient  to 
meet  such  check  or  order. 

20. — The  earnings  of  this  bank  shall  be  disposed  of  accord- 


i3i 

ing  to  orders  of  the  board  of  directors,  made  at  regular  or  spe- 
cial meetings,  and  no  dividend  shall  be  paid  to  stockholders, 
or  other  disposition  of  earnings  made,  except  upon  order  of  the 
board. 

21. — The  organization  papers  of  this  bank,  as  executed  and 
filed  with  the  Comptroller  of  the  Currency,  the  returns  of 
judges  of  the  elections,  the  proceedings  at  all  regular  and 
special  meetings  of  the  board  of  directors,  the  by-laws,  and  all 
changes  and  all  amendments  thereof,  and  the  report  of  examin- 
ing committees  of  directors,  made  according  to  law  28,  shall  be 
recorded  in  the  minute-book;  and  the  minutes  of  each  meeting 
of  the  board  shall  be  signed  by  the  president  and  attested  by 
the  cashier. 

22. — The  board  of  directors  shall  have  power  to  prescribe 
and,  when  expedient,  to  change  the  form  of  books  and  ac- 
counts to  be  used  in  the  transaction  of  the  business  of  this 
bank,  and  to  prescribe  the  general  or  particular  manner  in 
which  its  affairs  shall  be  conducted. 

23. — The  stock  of  this  bank  shall  be  assignable  and  trans- 
ferable only  on  the  books  of  this  bank,  subject  to  the  restric- 
tion and  provisions  of  the  banking  laws,  and  a  transfer  book 
shall  be  provided,  in  which  all  assignments  and  transfers  of 
stock  shall  be  made. 

24. — Transfers  of  stock  shall  not  be  suspended  preparatory 
to  the  declaration  of  dividends;  and  unless  an  agreement  to 
the  contrary  shall  be  expressed  in  the  assignments,  dividends 
shall  be  paid  to  the  stockholders  in  whose  name  the  stock  shall 
stand  at  the  date  of  the  declaration  of  dividends. 

25.  —  Certificates  of  stock  signed  by  the  president  and  cashier 
shall  be  issued  to  stockholders,  and  the  certificates  shall  state 
upon  their  face  that  the  stock  is  transferable  only  on  the  books 
of  the  bank. 

26. — All  the  current  expenses  of  this  bank  shall  be  paid  by 
the  cashier,  who  shall,  every  six  months,  or  oftener  if  required, 
make  to  the  board  of  directors  a  detailed  statement  thereof. 

27. — All  contracts,  checks,  drafts,  &c,  for  this  bank,  and  all 
receipts  for  circulating  notes  received  from  the  Comptroller  of 
the  Currency,  shall  be  signed  by  the  president  or  cashier. 

28. — There  shall  be  appointed  by  the  board  of  directors  a 


132 

committee  of members  thereof,  whose  duty  it  shall  be  to 

examine  every  three  months  the  affairs  of  this  bank,  to  count 
its  cash,  and  compare  its  assets  and  liabilities  with  the  accounts 
of  the  general  ledger,  ascertain  whether  these  accounts  and 
all  others  are  correctly  kept,  whether  the  condition  of  the 
bank  corresponds  therewith,  and  whether  the  bank  is  in  a 
sound  and  solvent  condition,  and  to  recommend  to  the  board 
such  changes  in  the  manner  of  doing  business,  &c. ,  as  shall 
seem  to  be  desirable,  the  result  of  which  examination  shall  be 
reported  to  the  board  at  the  next  regular  meeting  thereafter. 

29. — A  majority  of  the  directors,  including  the  president, 
(or  in  his  absence  the  vice-president,)  shall  be  a  quorum  to  do 
business. 

30. — A  copy  of  the  by-laws  of  this  bank  as  in  force  shall  be 
kept  in  a  convenient  place  in  the  bank,  to  which  any  stock- 
holder shall  have  free  access  during  the  regular  hours  of  busi- 
ness. 

31.  —  These  by-laws  may  be  changed  or  amended  by  the  vote 
of  two-thirds  of  the  directors. 

Where  there  is  any  conflict  between  the  law  and  articles  of 
association,  or  between  the  by-laws  and  either  of  the  other  two, 
the  law  takes  precedence,  the  articles  of  association  stand  next, 
and  the  by-laws  must  give  way  to  both. 

Increase  of  Capital. 

For  the  law  in  regard  to  this,  see  Section  5142,  page  16  of 
this  work.  The  following  is  the  form  of  notice  required  by 
the  Comptroller's  office: 

Certificate  of  Increase  of  Capital. 

National  Bank  of  , 

_   188-. 

To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 

It  is  hereby  certified  that  the  capital  stock  of  "The   National  Bank  of 

"  has  been  increased,  pursuant  to  the  articles  of  association  of  said  bank,  in 


the  sum  of  dollars,  all  of  which  has  been  paid  in,  and  that  the  paid-up  cap- 
ital stock  of  said  bank  now  amounts  to dollars. 

[bank  seal.]  , 

Cashier. 


i33 

State  of  , 

County  of ,  sj  .• 

I, ,  cashier  of  "  The National  Bank  of ,"  in  the  State 

of  ,  do  solemnly  swear  that  the  foregoing  certificate,  by  me  subscribed,  is 

true. 


Cashier. 
Subscribed  and  sworn  to  before  me  this day  of  ,  188— 


Reduction  of  Capital. 
For  the  legal  requirements  in  regard  to  this,  see  Section  5143, 
page  17  of  this  work.     The  following  is  the  form  of  notice  re- 
quired by  the  Comptroller's  office: 

National  Bank  op   , 

,  188- 

To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 

It  is  hereby  certified   that  the  capital  stock  of  "  The  National  Bank  of 

"  has  been  reduced  by  the  vote  of  shareholders  owning   two-thirds  of  the 


stock  of  the  association,  in  accordance  with  the  provisions  of  Section  5143  of  the 

Revised  Statutes  of  the  United  States,  in  the  sum  of dollars,  and  that  the 

paid-up  capital  stock  of  said  bank  since  said  reduction  is  dollars. 

[bank  seal.]  , 


Cashier. 


State  op 


County  of  ■ 


I, ,  cashier  of  "  The National  Bank  of  ,"  in  the  State 

of  ,  do  solemnly  swear  that  the  foregoing  certificate,  by  me  subscribed,  is 


true. 


Cashier. 
Subscribed  and  sworn  to  before  me  this day  of  ,  188-. 


A  record  of  the  vote  of  stockholders  should  be  kept  and 
forwarded  with  the  notice  of  reduction  of  capital. 

Voluntary  Liquidation. 

For  law,  see  Sections  5220,  5221,  5222,  and  5224,  and  com- 
ments thereon. 

The  following  letter  of  instructions  is  sent  to  banks  con- 
templating voluntary  liquidation,  from  the  Comptroller's  office: 

•'  Under  Section  5220  of  the  Revised  Statutes  of  the  United  States,  any  association 
may  go  into  voluntary  liquidation  and  be  closed  by  the  vote  of  shareholders  owning 
two- thirds  of  its  stock  ;  and,  under  Section  5221,  whenever  this  vote  is  taken  it  shall 
be  the  duty  of  the  board  of  directors   to  cause   notice  of  this  fact  to  be  certified, 


134 

under  the  seal  of  the  association,  by  its  president  or  cashier,  to  the  Comptroller  of 
the  Currency.  A  blank  is  inclosed  for  this  purpose.  You  will  see  on  the  lower 
portion  of  this  blank  a  form  of  the  notice  to  note-holders  and  other  creditors,  and 
you  will  please  observe  the  directions  printed  upon  it  as  to  publication.  One  copy 
of  one  issue  of  each  of  the  papers  containing  this  notice,  together  with  the  pub- 
lisher's certificate,  must  be  sent  to  this  office. 

"  The  law  provides  that  at  any  time  after  the  vote  to  go  into  liquidation,  the  bank 
may,  but  within  at  least  six  months  from  that  date  must  deposit,  through  this  office, 
with  the  U.  S.  Treasurer,  lawful  money  sufficient  to  retire  its  outstanding  circula- 
tion, and  withdraw  its  bonds. 

•'A  blank  form  for  authorizing  the  withdrawal  of  the  bonds  is  also  inclosed,  which, 
when  the  bank  determines  to  retire  its  circulation,  should  be  filled  out  and  for- 
warded to  this  office,  together  with  the  Treasurer's  duplicate  receipts  for  the  bonds 
to  be  withdrawn.  Before  the  Treasurer  will  release  the  bonds,  however,  all  ac- 
counts due  for  semi-annual  duty  and  for  expense  of  redemption  of  notes  must  be 
paid. 

"  No  business  should  be  done  after  the  vote  to  go  into  liquidation,  except  such  as 
is  necessary  to  pay  creditors  and  close  up  the  affairs  of  the  association. 

"  If  the  bank  is  closing  business  as  a  National  bank  for  the  purpose  of  reorganiza- 
tion as  an  institution  under  State  law,  no  deposits  should  be  transferred  from  the 
National  bank  to  the  new  organization  without  the  consent  of  depositors,  mani- 
fested by  checking  out  their  deposits  from  the  old  bank  and  re-depositing  them  in 
the  new. 

;'A  complete  record  of  the  meeting  of  the  stockholders  and  of  the  vote  should  be 
kept  and  forwarded  with  the  notice  of  liquidation  mentioned  above." 

The  form  of  certificate  of  liquidation  to  the  Comptroller  of 
the  Currency  is  as  follows: 

National  Bank , 

(  188-. 

To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 
Sir:  It  is  hereby  certified,  in  pursuance  of  Sections  5220  and  5221  of  the  Revised 

Statutes  of  the  United  States,  that  at  a  meeting  of  the  stockholders  of  the  , 

located  at  ,  in   the  State  of ,  duly  notified  and  held  pursuant  to  law 

and  the  articles  of  association  of  said  bank,  at  the  office  of  said  association  at  

aforesaid,  on  the day  of ,  18 — ,  it  was  voted  by  the  stockholders  of  said 

association,  owning  more  than  two-thirds  of  its  stock,  that  said  association  go  into 
liquidation  and  be  closed. 

In  testimony  whereof,  I  have,  by  instruction  of  the  board  of  directors  of  said 
association,  hereto  subscribed  my  name  and  affixed  the  seal  of  said  association  at 
aforesaid,  the  day  and  year  above  written. 


[seal  of  the  bank.] 


President  or  Cashier. 


NOTICE. 
The National  Bank ,  located  at   ,  in  the  State  of 


closing  up  its  affairs.     All  note-holders  and  others,  creditors  of  said  association,  are 


(5 


135 

therefore  hereby  notified  to  present  the  notes  and  other  claims  against  the  associa- 
tion for  payment. 

President  or  Cashier. 
Dated ,  18S-. 

Note. — The  above  notice  to  be  published  for  a  period  of  two  months  in  a  news- 
paper in  the  city  of  New  York,  and  also  in  a  newspaper  published  in  the  place  in. 
which  the  bank  is  located.  (See  Section  5221,  Revised  Statutes.)  A  certificate  of 
the  publisher  that  the  required  publication  has  been  made,  together  with  a  slip  con- 
taining notice  from  one  issue  of  each  paper,  should  be  sent  to  the  office  of  the 
Comptroller  of  the  Currency. 

Withdrawal  of  Bonds. 
The  law  under  which  this  may  be  done  is  contained  in  Sec- 
tions 5160,  page  26;  5167,  page  29;  5222,  page  60;  Section  3, 
Act  of  June  20th,  1874,  page  87,  and  Section  7,  Act  of  July  12th, 
1882,  page  107.  Bonds  can  only  be  withdrawn  by  furnishing  a 
power  of  attorney  to  the  Comptroller  of  the  Currency  for  the 
purpose.  The  following  is  the  usual  form  of  such  power  of 
attorney: 

At  the   meeting  of  the  board  of  directors  of  the  Bank  of  ,  held  at 

their  banking  house, ,  188-,  the  following  resolution  was  adopted: 

Resolved,  That  the  Comptroller  of  the  Currency  be,  and  he  is  hereby,  authorized 

to  withdraw  $ U.  S.  bonds,  deposited  with  the  Treasurer  of  the  United  States 

by  this  bank  to  secure  circulation,  and  described  as  follows  :  $ of  the  loan  of 

;   and  that be,  and  is  hereby,  authorized  to  sell,  assign,  and  transfer 

the  same,  and  to  appoint  one  or  more  attorneys  for  that  purpose. 

I  hereby  certify  that  the  above  is  a  true  extract  from  the  minutes  of  said  meeting. 

[seal  of  bank.]  , 

Cashier,  and  Secretary  of  the  Board  of  Directors. 

Note. — The  Treasurer's  receipts  for  the  bonds  proposed  to  be  withdrawn  must  be 
forwarded  (with  this  form  properly  filled)  to  the  Comptroller  ofthe  Currency. 


136 


Synopsis  of  Circulars  to  Officers  of   National  Banks,  by 
the  Comptroller  of  the  Currency. 


Synopsis  of  Instructions  as  to  Reports  of  Condition. 
GENERAL. 

All  organized  associations,  including  those  that  have  not 
commenced  business,  must  promptly  report  their  condition 
when  called  upon,  using  the  latest  ' '  Forms ' '  supplied  by  the 
Comptroller  of  the  Currency. 

The  penalty  prescribed  by  Section  52 11,  page  50,  will  be 
duly  enforced  if  reports  are  not  promptly  made. 

Receipt  of  reports  is  not  acknowledged,  but  due  notice  of 
non-receipt  is  given. 

Affidavits  must  be  made  before  a  notary  public,  justice  of 
the  peace,  or  other  officer  duly  authorized  to  take  acknowledg- 
ments of  oaths.  Such  notary,  or  officer,  however,  must  not  be 
an  officer  of  the  bank.  (See  Act  of  February  26th,  1881,  page 
106.) 

DETAILS. 

I.  '■'■Notes  and  bills  discounted.'1'' — Here  include  only  dis- 
counted paper  and  notes  for  loans. 

II.  "Suspended  and  bad  debts." — All  paper  past  due,  and 
all  with  interest  unpaid  for  six  months,  as  denned  in  Section 
5204. 

III.  ' ' Indebtedness  of  directors. ' '  — Loans  for  their  use  or  ben- 
efit and  debts  for  which  they  are  responsible. 

IV.  "Overdrafts.'1'' — To  be  stated  as  such,  and  not  deducted 
from  deposits. 

V.  "Premiums.'''' — Premium  or  interest  paid  on  United 
States  and  other  bonds  and  securities,  specie,  &c,  should  be 
reported  as  such,  and  not  included  as  part  of  their  face  value. 

VI.  "Bonds  and  securities.''''  —  Enter  «//,  whether  State  or 
National,  at  their  par  value,  without  regard  to  premium  or  in- 
terest.    (See  Premiums,  par.  5. )    If  held  below  par,  enter  at  cost 


i37 

price.  Report  no  bonds  as  "deposited  with  the  United  States 
Treasurer  to  secure  circulating  notes,"  or  for  other  purposes, 
before  bank  has  received  Treasurer's  receipt  for  same. 

VII.  "Specie." — Report  precise  amount;  if  any  be  muti- 
lated or  uncurrent,  enter  at  cost  price. 

VIII.  "Capital  stock." — Until  all  the  requirements  of  Sec- 
tion 5140,  page  13,  as  to  payments  of  original  capital  stock,  or 
those  of  Section  5142,  page  16,  as  to  increase  thereof,  are  re- 
spectively complied  with,  do  not  report  payments  thereon  as 
"capital  stock  paid  in,"  but  enter  them  so  as  to  show  amount 
of  capital  stock  officially  acknowledged,  and  amount  paid  but 
not  acknowledged  by  the  Comptroller  separately. 

IX.  "Stirplus  fund." — Section  5199,  page  44,  must  be  com- 
plied with,  and  requisite  amount  carried  to  "surplus  fund," 
and  so  reported. 

X.  "Circulating  notes." — The  total  amount  of  notes  re- 
ceived from  Comptroller  of  Currency  must  be  stated,  and  all 
on  hand,  whether  signed  or  not,  entered  as  indicated  on  blanks 
furnished. 

XL  " Stale  circulation  outstanding."  —  This  item  is  only  for 
banks  converted  from  State  to  National  with  any  of  the  old  cir- 
culation unredeemed. 

XII.  "Lawful  money  reserve." — Banks  are  reminded  that 
the  provisions  of  law  as  to  keeping  their  reserve  of  lawful 
money  good  are  explicit  and  absolute,  that  disregard  of  them  is 
an  open  violation  of  law,  and  that  it  is  the  Comptroller's  duty 
to  enforce  the  penalties  of  the  law  for  such  violation. 

Reserve. 

The  law  now  regulating  the  reserves  which  National  banks 
are  required  to  keep  on  hand  to  protect  their  deposits  is  found 
in  Sections  5191,  5192  and  5195  of  the  Revised  Statutes  as 
modified  by  Section  2,  part  of  Section  3  of  the  Act  of  June 
20th,  1874,  and  part  of  Section  12  of  the  Act  of  July  12th,' 
1882. 

Section  5191  (see  page  39)  names  sixteen  cities,  each  bank 
located  in  any  one  of  which  is  required  to  have  on  hand  at  all 
times  lawful  money  of  the  United  States,  equal  at  least  to  25 
per  cent,  of  the  aggregate  amount  of  its  circulation  and  de- 


i33 

posits;  and  that  each  bank  located  elsewhere  than  in  the  cities 
named  is  required  to  have  on  hand  lawful  money  at  least  equal 
to  15  per  cent,  of  its  aggregate  circulation  and  deposits.  There 
are  thus  banks  of  two  classes — 25  per  cent,  banks  and  15  per 
cent,  banks. 

That  the  words  on  hand  in  this  section  do  not  mean  in  the 
bank  itself — in  its  own  vault  or  till — may  be  seen  from  sections 
5192  and  5195.  Section  5192  provides  that  three-fifths  of  the 
reserve  which  15  per  cent,  banks  are  required  to  keep  may  con- 
sist of  balances,  available  for  redemption  of  circulating  notes, 
due  to  the  association  from  National  associations  approved  by 
the  Comptroller  of  the  Currency,  located  in  any  of  the  sixteen 
cities  named,  the  other  two-fifths  being  in  bank.  Section  5195 
provides  that  25  per  cent,  banks  outside  of  New  York  may 
each  keep  one-half  of  their  lawful  reserve  in  a  National  bank 
approved  by  the  Comptroller  located  in  New  York  city.  The 
provisions  in  the  sections  mentioned  having  reference  to  the 
redemption  of  circulating  notes  of  National  banks  at  redemp- 
tion agencies  in  New  York  and  other  reserve  cities  have  been 
repealed  by  Sections  1  and  2  of  the  Act  of  June  20th,  1874, 
leaving  still  in  force  the  right  to  keep  a  certain  portion  of  their 
required  reserve  with  banks  in  those  cities.  Sections  1  and  2 
of  the  Act  mentioned  also  repeal  all  provisions  requiring  re- 
serve on  circulating  notes. 

Instead  of  reserve  on  circulation,  each  National  bank  is  re- 
quired to  keep  at  all  times  with  the  Treasurer  of  the  United 
States,  in  lawful  money,  a  sum  equal  to  5  per  cent,  of  its 
circulation.  This  5  per  cent,  fund  is  also  permitted  to  be 
counted  as  a  portion  of  the  reserve  on  deposits.  The  25  per 
cent,  banks  are  divided  into  two  classes:  those  in  New  York 
city  and  those  in  the  other  reserve  cities. 

In  New  York  city  the  required  reserve  is  25  per  cent,  of 
deposits,  all  of  which  must  be  in  bank. 

In  the  other  reserve  cities  the  required  reserve  is  also  25  per 
cent,  of  deposits,  only  one-half  or  12^2  per  cent,  of  which 
need  be  kept  in  bank;  the  remaining  12^  per  cent,  can  be 
deposited  in  New  York  with  approved  reserve  agents. 

Outside  of  New  York  and  the  reserve  cities  the  reserve  is 


i39 

15  per  cent,  of  deposits,  two-fifths  to  be  kept  in  bank  and 
three-fifths  in  New  York,  or  in  any  of  the  other  reserve  cities. 

These  various  percentages  must  be  computed  on  the  aggre- 
gate deposits,  that  is,  on  all  deposits  which  appear  on  the 
balanced  statement  of  the  bank.  It  is  very  doubtful  whether 
National  banks  have  power  either  to  take  time  deposits  or  to 
borrow  money  and  create  bills  payable.  At  all  events  it  is 
believed  that  whatever  agreement  may  be  made  with  a  depos- 
itor or  party  from  whom  money  is  received  on  time,  or  bor- 
rowed, the  bank  would  be  obliged  to  pay  on  demand  if  the 
other  parties  did  not  choose  to  adhere  to  their  agreement.  For 
this  reason  all  time  deposits  or  bills  payable  reported  by  Na- 
tional banks  are  held  to  require  a  reserve  the  same  as  other 
deposits. 

All  other  deposits  are  held  to  include  "dividends  unpaid;" 
''individual  deposits  subject  to  check;"  "demand  certificates 
of  deposit;"  "time  certificates  of  deposit;"  "certified  checks;" 
"cashiers'  checks  outstanding;"  "United  States  deposits;" 
"deposits  of  United  States  disbursing  officers;"  "bills  paya- 
ble." 

Deposits  are  divided  for  purposes  of  computing  reserve  into 
two  classes,  viz. :  bank  deposits — that  is,  amounts  due  to 
banks — in  one  class,  and  all  other  deposits  in  the  other.  Cer- 
tain deductions  are  allowed  from  the  gross  deposits.  First, 
checks  in  exchanges  can  be  deducted  from  deposits  of  any 
class;  but,  second,  amounts  due  from  banks  can  only  be  de- 
ducted from  amounts  due  to  banks,  and  this  must  be  particu- 
larly noted.  *  Any  excess  with  approved  reserve  agents  over 
and  above  the  proportion  of  reserve  which  may  be  lawfully 
kept  with  them  must  not  be  regarded  as  reserve,  but  may  be 
treated  as  if  simply  due  from  banks,  and  deducted  from  amounts 
due  to  banks.  In  a  bank  belonging  to  or  dealing  through  a 
clearing-house,  the  clearing-house  exchanges  are  the  only 
checks  which  can  properly  be  deducted  from  deposits;  but  in 
a  bank  located  where  there  is  no  clearing-house  it  is  allowable 
to  reduce  the  deposits  by  checks  on  banks  in  same  town  or 
city.     If  banks  desire  to  have  checks  on  banks  in  same  place 

*The  allowance  of  any  deduction  whatever  is  a  ruling  of  the  Comptroller's  office. 


140 

allowed  as  a  deduction,  such  checks  must  be  separated  in  the 
schedule  of  checks  and  cash  items  on  the  back  of  the  report. 
Reserve  in  Bank. 

The  funds  available  for  reserve  in  bank  are  comprised  under 
the  general  term  lawful  money,  which  has  been  held  to  mean 
gold  coin  of  the  United  States,  silver  dollars,  and  legal-tender 
notes.  By  special  statute  clearing-house  certificates  are  avail- 
able for  reserve.  (Section  5192,  R.  S.)  In  the  same  way  are 
available  United  States  gold  and  silver  certificates  (Sec.  12  of 
Act  July  12th,  1882,)  and  United  States  certificates  of  deposit 
of  legal-tender  notes.  (Section  5193,  R.  S.)  There  were 
formerly  many  other  forms  of  certificates  and  Treasury  notes 
available  as  reserve  under  various  statutes.  These  are,  how- 
ever, now  obsolete.  All  the  forms  in  which  reserve  may  now 
be  kept  have  been  mentioned.  Some  of  these  obsolete  forms 
were  the  compound-interest  notes,  seven-thirty  notes,  three  per 
cent,  certificates,  &c. 

Reserve  Outside  of  Bank. 

With  the  15  per  cent,  banks  an  amount  with  an  approved 
reserve  agent  in  any  reserve  city  equal  to  but  not  exceeding 
three-fifths  of  the  total  reserve  required,  is  available  for  reserve. 
With  25  per  cent,  banks  not  located  in  New  York  city  an 
amount  with  an  approved  reserve  agent  not  exceeding  one-half 
of  the  total  reserve  required,  is  available  for  reserve. 

The  5  per  cent,  fund,  to  an  amount  not  exceeding  5  per  cent, 
of  the  circulation  of  the  bank,  is  allowed  to  protect  deposits. 
In  the  twenty-five  per  cent,  banks  it  will  protect  4  times,  and 
in  the  15  per  cent,  banks  6^3  times  its  own  amount  of  deposits. 
In  all  computations  given  hereafter  allowance  is  made  at  these 
rates  for  this  fund.  No  amount  with  the  Treasurer  of  the 
United  States  in  excess  of  5  per  cent,  of  circulation  can  count 
as  reserve. 

Computation  of  Reserve. 

The  division  of  reserve  into  reserve  with  approved  agents 
and  reserve  at  home,  and  the  different  requirements  of  law  as 
to  banks  in  New  York  city,  banks  in  other  reserve  cities,  and 
country  *  banks,   have  somewhat   complicated  an  otherwise 

♦This  is  simply  a  convenient  term  for  banks  outside  of  the  reserve  cities. 


141 

simple  matter;  and  the  method  of  computing  reserve  will  vary 
with  the  class  to  which  the  bank  belongs,  the  amount  with  re- 
serve agents,  and  the  amounts  due  to  and  from  banks. 

It  is  believed,  however,  that  all  cases  which  can  arise  are 
included  in  the  following  seven  rules  for  the  computation  of 
reserve  : 

I.  For  banks  located  in  New  York  city. 

Rule. — Deduct  amounts  due  from  banks  from  amounts 
due  to  the  same,  and  also  deduct  exchanges  for  clearing-house 
from  all  other  deposits;  add  together  the  results  of  the  sub- 
tractions and  deduct  from  the  sum  four  times  the  five  per  cent, 
redemption  fund.  Twenty-five  per  cent,  of  the  remainder  is 
the  required  reserve,  which  must  all  be  in  bank,  in  one  of  the 
forms  of  lawful  money  or  certificates  available  for  reserve, 
heretofore  described.  If  amounts  due  from  banks  equal  or 
exceed  amounts  due  to  the  same,  both  amounts  are  omitted 
from  the  computation. 

II.  For  banks  located  in  reserve  cities  other  than  New  York, 
when  there  is  no  excess  with  approved  reserve  agents  in  New 
York  city. 

Rule. — Deduct  amounts  due  from  banks  from  amounts  due 
to  the  same,  and  also  deduct  exchanges  for  clearing-house  from 
all  other  deposits;  add  together  the  results  of  the  subtractions, 
and  deduct  from  the  sum  four  times  the  five  per  cent,  redemp- 
tion fund.  Twenty-five  per  cent,  of  the  remainder  is  the  total 
required  reserve ;  one-half  at  least  of  this  total  reserve  must  be 
in  bank,  in  lawful  money.  The  remaining  half  may  be  with 
approved  reserve  agents.  There  is  no  limit  on  the  amount  of 
reserve  which  may  be  kept  in  bank.  If  amounts  due  from 
banks  equal  or  exceed  amounts  due  to  the  same,  both  amounts 
must  be  omitted  from  the  computation. 

III.  For  banks  located  in  reserve  cities  other  than  New 
York,  when  the  home  reserve  is  close,  and  there  is  an  excess 
over  the  permitted  one-half  held  with  reserve  agents,  and  when 
the  amounts  due  to  banks  are  so  great  that  it  is  apparent  they 
will  exceed  all  amounts  due  from  the  same,  even  including 
all  excess  with  reserve  agents. 

Rule. — Deduct  amounts  due  from  banks,  not  including  ex- 


142 

cess  with  reserve  agents,  from  amounts  due  to  the  same,  and 
also  deduct  exchanges  for  clearing-house  from  all  other  de- 
posits. Add  together  the  results  of  the  subtractions  and  deduct 
from  the  sum  four  times  the  five  per  cent,  redemption  fund. 
From  the  result  take  the  whole  amount  due  from  reserve 
ao-ents.  One-seventh  of  the  remainder  will  be  the  reserve  re- 
quired  at  home. 

The  preceding  rule  is  a  short  method  of  arriving  at  a  result 
which  might  otherwise  take  considerable  computation.  The 
mathematical  explanation  of  the  reasons  for  this  rule  are  too 
long  to  be  given  here.  The  rule  is  only  applicable  where  the 
amounts  due  to  banks  are  in  excess  of  amounts  due  to  banks 
added  to  the  excess  with  reserve  agents. 

IV.  For  banks  located  in  reserve  cities  other  than  New  York, 
where  the  home  reserve  is  very  close,  and  there  is  an  excess 
over  the  permitted  one-half  with  reserve  agents.  The  amounts 
due  to  banks  are,  however,  exceeded  by  the  amolmts  due  from 
the  same  added  to  the  excess  with  reserve  agents. 

Rule. — Omit  amounts  due  to  and  from  banks  from  the  com- 
putation. Deduct  exchanges  for  clearing-house  from  all  other 
deposits.  Deduct  from  the  remainder  four  times  the  amount 
of  the  five  per  cent,  redemption  fund.  Twenty-five  per  cent. 
of  the  result  is  the  total  reserve  required.  One-half  of  the 
total  reserve  may  be  kept  with  reserve  agents,  and  the  remain- 
ing one-half  must  be  in  bank.  No  amount  in  the  hands  of  re- 
serve  agents  can  directly  make  up  for  a  deficiency  in  home 
reserve.  An  excess  in  home  reserve  can,  on  the  contrary, 
always  count,  since,  if  a  bank  sees  fit,  it  can  keep  all  its  reserve 
in  its  own  vaults. 

V.  For  country  banks,  when  there  is  no  excess  with  approved 
reserve  agents. 

RULE. — Deduct  amounts  due  from  banks  from  amounts  due 
to  the  same,  and  also  deduct  exchanges  for  clearing-house,  if 
there  is  a  clearing-house  in  the  place  where  the  bank  is  located, 
or,  if  not,  checks  on  banks  in  the  same  town,  from  all  other 
deposits;  add  together  the  results  of  the  subtractions,  and  from 
the  sum  deduct  62/3  times  the  five  per  cent,  redemption  fund. 
Fifteen  per  cent,  of  the  remainder  is  the  total  reserve  required, 


i43 

two-fifths,  at  least,  of  which  must  be  at  home.     The  remaining 
three-fifths  may  be  with  approved  agents. 

VI.  For  country  banks,  when  the  home  reserve  is  close  and 
there  is  an  excess  over  the  permitted  three-fifths  with  reserve 
agents,  and  when  the  amounts  due  to  banks  are  so  great  that 
it  is  apparent  that  the  excess  with  reserve  agents  added  to  the 
amounts  due  from  banks  will  not  exceed  such  amount  due 
banks. 

Rule. — Deduct  amounts  due  from  banks,  not  including  ex- 
cess with  reserve  agents,  from  amounts  due  to  banks,  and  also 
deduct  exchanges  for  clearing-house,  or  checks  on  banks  in 
same  town,  from  all  other  deposits;  add  together  the  results 
of  these  subtractions,  and  deduct  from  the  sum  6%  times  the 
five  per  cent,  redemption  fund.  From  the  remainder  take  the 
whole  amount  with  approved  reserved  agents.  Six-ninety- 
firsts  of  the  result  is  the  home  reserve  required. 

By  this  process,  as  well  as  by  the  process  in  Rule  III,  nothing 
but  the  excess  over  permitted  reserve  with  reserve  agents  is 
used  to  reduce  the  amount  due  to  banks,  although  it  might 
appear  otherwise  from  the  fact  that  the  whole  amount  is  de- 
ducted. In  reality,  a  sum  with  reserve  agents  equal  in  the 
one  case  to  one-half,  and  in  the  other  to  three-fifths  of  the 
total  reserve  required,  is  retained  for  that  purpose. 

VII.  For  country  banks,  when  the  home  reserve  is  close, 
but  when  excess  with  reserve  agents  added  to  amounts  due 
from  banks  exceeds  amounts  due  to  banks. 

Rule. — Omit  amounts  due  to  and  from  banks  from  the  com- 
putation and  proceed  as  in  Rule  V. 

AVERAGE  RESERVE. 
The  average  reserve  for  any  given  period  may  be  obtained 
by  computing,  by  the  methods  heretofore  shown,  the  net  de- 
posits requiring  reserve  for  each  day  in  that  period,  and  adding 
the  results  together  for  a  divisor.  In  the  same  way  the  reserves 
held  on  the  same  days  should  be  added  together  for  a  dividend. 
The  quotient  will  be  the  percentage  of  average  reserve  for  the 
period. 

FIFTEEN   PER   CENT.   BANKS   IN   RESERVE   CITIES. 
There  are  two  or  three  instances  of  banks  now  located  in 


144 

reserve  cities  which  are  only  required  to  keep  a  total  reserve 
of  15  per  cent.  This  anomaly  arises  from  the  fact  that  when 
these  banks  were  organized  they  were  situated  in  a  suburb 
which  has  since  been  absorbed  by  the  growing  city.  Thus 
Birmingham  was  taken  into  Pittsburgh,  Pa.  The  National 
bank  in  Birmingham,  organized  there  before  that  town  became 
a  part  of  Pittsburgh,  still  retains,  under  a  decision  of  the  At- 
torney-General of  the  United  States,  the  exact  status  it  had 
at  organization,  and  will  retain  it  until  its  charter  expires. 
Among  other  rights  retained  is  that  of  keeping  a  reserve  of  15 
per  cent.  only.  In  the  same  situation  are  banks  in  Dorchester, 
Roxbury,  and  Charlestown,  now  parts  of  Boston,  Mass.,  and 
in  Georgetown,  now  part  of  Washington,  D.  C. 
APPROVED  RESERVE  AGENTS. 
Approved  reserve  agents  have  been  frequently  mentioned  in 
the  foregoing  pages.  Any  bank  outside  of  the  reserve  cities 
can  select  any  National  bank  within  any  of  such  cities  as  a 
depositary  for  its  funds,  and  such  funds  so  deposited  are,  when 
the  selection  is  approved  by  the  Comptroller,  allowed  to  be 
counted  as  a  part  of  the  required  reserve  of  the  depositing 
bank.  In  the  same  way  banks  in  reserve  cities  can  select  for 
approval  banks  in  New  York  city.  The  bank  making  the  se- 
lection writes  to  the  Comptroller  of  the  Currency  and  asks  his 
approval  of  the  chosen  bank.  The  approval  is  usually  given, 
and  the  necessary  entries  made  in  the  books  of  the  Comp- 
troller's office.  The  bank  is  advised  that  the  selection  is  ap- 
proved, and  thenceforth  all  balances  due  from  this  approved 
bank  are  counted  as  available  for  reserve  under  the  law. 

RICHMOND   AND   CHARLESTON. 

Richmond  and  Charleston,  although  named  in  Section  5192 
among  the  cities  wherein  15  per  cent,  banks  are  permitted  to 
deposit  three-fifths  of  their  reserves,  are  not  named  in  Section 
5191  among  the  cities  wherein  banks  are  required  to  keep  the 
larger  reserve  of  25  per  cent. — this  larger  reserve  being  prin- 
cipally required  because  of  the  greater  responsibility  incurred 
by  receiving  the  deposit  of  bank  reserves.  For  this  reason  no 
banks  located  in  Richmond  or  Charleston  have  ever  been  ap- 
proved as  reserve  agents  by  the  Comptroller. 


i44  a 

NEW  FORM  FOR  COMPUTING  RESERVE. 

The  following  is  the  substance  of  the  new  form  which  the 
banks  will  be  required  in  future  to  fill  out  in  their  report  of 
condition  : 


Bank  Directors  should  bear  in  mind  that  Section  5 191  U.  S.  Revised 
Statutes  forbids  a  Bank  to  increase  its  liabilities  by  new  loans  or  discounts,  or 
to  declare  any  dividend  when  its  Reserve  is  below  the  legal  requirement. 


Form  B. —  Calculation  of  the  Lawful  Money  Reserve  of  National 

Banks  Located  Elsewhere  than  in  Reserve  Cities  and 

Central  Reserve  Cities. 

No.  of  Bank Report  of  the  state  of  lawful  money  reserve  of  the 

bank,  located  at State  of 

at o'clock M.,  188     . 


N.  B. — If  this  accompanies  a  Report  of  Condition  it  should  be  signed  by 

,  Cashier.     If  it  accompanies  a  Report  of  Examination  it 

should  be  signed  by ,  Examiner. 


ITEMS   ON   WHICH   RESERVE  IS  TO   BE  COMPUTED. 

Liabilities. 

Due  to  National  banks,  $ Due  to  State  banks  and  bankers,  $ 

Total,  $ 

Less  due  from  other  National  banks,  $ Due  from  State  banks  and 

bankers,  $ Total,  $ 

Add  to  difference:  1st.  Dividends  unpaid;  2d.  Individual  deposits;  3d. 
United  States  deposits  ;  4th.  Deposits  of  U.  S.  Disbursing  officers.  And  from 
the  gross  amount  of  these  items  deduct — 1st.  Exchanges  for  clearing  house  ; 
2d.   Checks  on  other  banks  in  the  same  place  ;  3d.  National  bank  notes.     And 

15  per  cent,  of  the  remainder  is  the  entire  reserve  required,  namely  $ 

Deduct  from  this  the  five-per-cent.  redemption  fund  with  Treasurer  U.  S.,  and 
the  balance  will  be  the  net  reserve  to  be  held,  $ 

Note. — Should  the  aggregate  "  due  from  "  exceed  the  aggregate  "  due  to  " 
banks,  both  items  must  be  omitted  from  the  calculation. 


i44  b 


ITEMS   COMPOSING  THE   NET  RESERVE,    AND   THE  DISTRIBUTION 
OF  THE  SAME. 


Three-fifths  of  the  net  reserve  is  $■ 
Items  making  up  the  same  may 
consist    of  *  balances    with 
following   approved   reserve 
agents,  viz.: 

$ 


Total. 


Showing  an  excess  or  deficien- 
cy with  reserve  agents  of.....  $■ 


Two-fifths  of  the  net  reserve  is . 

Items  in  bank  which  may  law- 
fully make  up  the  same,  viz. : 

Fractional  silver $ 

Silver  dollars 

Silver  Treasury  Cer- 
tificates  

Gold  coin 

Gold  Treasury  certifi- 
cates   

Legal-tender  notes 

U.  S.  certificates  of  de- 
posit for  legal  ten- 
ders   

Clearing-House  cer- 
tificates for  coin  and 

legal  tenders 

Total $ 

Showing  an  excess  or  deficien- 
cy in  the  §  reserve  held  of.. 


RECAPITULATION. 


Excess   in   the  entire   reserve 
held : 


Deficiency   in   entire   reserve 
held 


*  If  reciprocal  accounts  are  kept  with  reserve  agents,  only  the  net  amount 
due  from  such  agents  is  available  for  reserve. 

Bank  officers  will  always  insert  in  their  Reports  of  Condition  one  of  these 
forms  properly  filled  in,  and  bank  examiners  will  do  the  same  in  their  Reports 
of  Examination. 


Form  A  is  for  the  banks  required  to  keep  a  reserve  of  twenty- 
five  percent.,  and  is,  of  course,  the  same  as  Form  B,  excepting 
that  twenty-five  per  cent. ,  instead  of  fifteen  per  cent. ,  of  the 
gross  amount  of  liabilities,  less  deductions  allowed,  is  the 
entire  reserve  required  ;  and  one-half,  instead  of  three-fifths 
of  the  net  reserve  held  is  to  be  compared  with  the  balances 
with  approved  agents,  to  show  excess  or  deficiency  with  them, 
and  one-half,  instead  of  two-fifths,  compared  with  items  in 
bank,  to  show  excess  or  deficiency  in  them. 

Attention  is  called  to  the  fact  that  in  N.  Y.  city  and  the 
new  central  reserve  cities  the  banks  must  keep  the  whole  net 
reserve  required,  when  ascertained  as  above,  in  their  own 
possession. 


145 


PUBLICATION  OF  REPORTS. 
Each  bank  must  publish  its  reports,  in  precisely  the  same 
form  as  made  to  the  Comptroller,  in  a  newspaper  published  in 
the  place  where  the  association  is  established,  or,  if  there  be 
none  in  the  place,  in  the  one  nearest  in  the  same  county,  and 
furnish  such  proof  of  the  publication  as  the  Comptroller  may 
require.     (See  Section  521 1,  page  50.) 

PROOF   OF   PUBLICATION. 

To  secure  uniformity  in  the  proof  of  publication  of  reports, 
the  form  of  affidavit  required  for  proof  is  furnished  to  the 
banks  when  reports  are  called  for,  and  the  instructions  there- 
with must  be  strictly  complied  with,  or  banks  will  be  put  to 
the  additional  expense  of  publishing  reports  a  second  time. 

EXCHANGE   OF   BONDS. 

The  Comptroller  of  the  Currency  furnishes  the  necessary 

forms  and  instructions  for  the  exchange  of  bonds  deposited  to 

secure  circulating  notes,  under  the  provision  of  Section  5167, 

page  29,  upon  terms  prescribed  by  the  Secretary  of  the  Treasury. 

U.  S.   BONDS. CHARGING   OFF   PREMIUMS. 

It  has  been  the  impression  that  under  a  ruling  of  the  Comp- 
troller of  the  Currency  banks  must  retire  the  premium  paid 
by  them  on  U.  S.  bonds  deposited  to  secure  circulation  before 
dividends  can  be  paid,  or  that  said  premium  must  be  retired 
within  five  years  in  semi-annual  instalments.  They  are  thus 
supposed  to  be  precluded  from  securing  circulation  with  high- 
priced  bonds  without  a  suspension  of  dividends. 

Under  present  requirements  the  amount  of  premium  paid 
for  U.  S.  bonds  can  be  counted  as  an  asset  so  long  as  such 
amount  does  not  exceed  the  market  price  for  said  bonds. 

Redemption  and  Destruction  of  Mutilated  Notes  of  National 

Banks. 

Mutilated  notes  forwarded  direct  to  the  Comptroller  bv  the 
banks  that  issued  them,  under  the  provisions  of  Sections  5160, 
5167,  or  5184,  pages  26,  29,  and  36,  should  be  addressed  to  the 
"Comptroller  of  the  Currency,  Treasury  Department,  Wash- 
ington, D.  C,"  with  express  charges  prepaid,  and  accompanied 
10 


146 

by  a  letter  stating  contents  of  package  in  detail,  name  of  agent 
authorized  to  witness  their  destruction,  and  the  denominations 
of  new  notes  desired  in  return.  Packages  must  not  contain 
less  than  $500,  and  always  even  hundreds  of  dollars,  each  de- 
nomination to  be  separately  strapped,  the  amount  plainly 
marked  thereon,  and  the  whole  effectively  canceled  by  cutting 
out  officers'  signatures;  otherwise  the  notes  will  be  returned 
for  cancellation  at  the  bank's  expense. 

Bank  officers  must  decide  as  to  the  propriety  of  redeeming 
mutilated  notes  at  their  face  value,  and  are  advised  always  to 
do  so  on  satisfactory  evidence  of  the  total  destruction  of  the 
missing  portions.  When  otherwise  redeemed,  the  fragments 
should  be  held  until  the  fractions  amount  to  dollars.  All  notes 
will  be  accepted  for  the  value  at  which  the  bank  redeemed 
them.  Bank  officers  will  please  paste  together  the  fragments 
of  the  same  note  before  transmitting  it  for  redemption.  Each 
bank  must  authorize,  by  power  of  attorney,  under  the  provisions 
of  Section  §184.,  page  36,  some  person  unconnected  with  the  Treas- 
ury Department  to  witness  the  destruction  of  its  notes,  or  must 
send  one  of  its  officers,  duly  accredited,  to  do  so. 

Reports  of  Dividends  and  Earnings. 

The  Comptroller  forwards  to  each  National  bank  suitable 
blank  forms  on  which  to  make  reports,  semi-annually,  of  their 
dividends  and  earnings;  and  by  observing  the  following  in- 
structions, errors  in  making  such  reports  will  be  avoided. 

The  reports  are  required  by  Section  5212,  Revised  Statutes, 
to  be  made  to  the  Comptroller  within  ten  days  after  declaring 
a  dividend,  and  reports  of  earnings  and  the  disposition  thereof 
must  be  made  whether  dividends  are  declared  or  not. 

The  number  prefixed  to  each  paragraph  corresponds  to  an 
item  having  the  same  number  on  the  forms  for  the  reports. 

1.  Undivided  Prof  Is. — Enter  the  total  earnings  on  hand  at 
the  commencement  of  the  period  covered  by  the  report,  whether 
to  the  credit  of  Profit  and  Loss,  Discount,  Interest,  Exchange, 
Contingent  Fund,  or  any  other  account  on  the  books  of  the 
bank,  but  do  not  include  the  surplus  fund  accumulated  accord- 
ing to  the  provisions  of  Section  5199  of  the  Revised  Statutes. 

2.  Gross  Earnings. — Enter  the  total  amount  earned  during 


M7 

the  period  covered  by  the  report  before  any  deductions  what- 
ever have  been  made  therefrom. 

3.  Other  Profits. — Enter  any  amount  that  may  have  been  re- 
covered, during  the  period  covered  by  the  report,  from  matters 
previously  charged  off,  any  premium  received  on  stock  of  the 
bank,  in  cases  of  increase  of  capital,  or  where  the  stock- 
holders originally  pay  a  premium  for  stock,  &c. 

4.  Withdrawn  from  Surplus. — Enter  any  amount  that  may 
have  been  withdrawn  from  the  surplus  fund  during  the  period 
covered  by  the  report. 

When  a  dividend  is  declared  the  surplus  fund  must  not  be 
reduced  below  an  amount  equal  to  one-tenth  of  the  net  earn- 
ings of  the  bank  since  its  organization.  If  it  be  necessary  to 
use  so  much  of  the  fund  to  meet  losses,  &c. ,  as  will  reduce  it 
below  the  proportion  named,  the  dividend  must  be  passed. 

5.  Premiums  charged  off. — Enter  the  amount,  if  any,  charged 
off  during  the  period  covered  by  the  report  on  account  of  pre- 
miums previously  paid  by  the  bank,  the  valuation  of  which, 
debited  on  the  books,  must  be  reduced  to  a  sum  commensurate 
with  the  market  value  of  the  bonds  owned  by  the  association 
before  the  declaration  of  a  dividend,  and  should  be  wholly 
charged  off  as  rapidly  as  possible. 

6.  Losses. — Enter  the  amount  of  any  losses  charged  off  dur- 
ing the  period  covered  by  the  report. 

7.  Expenses,  &c. — Enter  the  sum  of  the  amounts  charged  off 
during  the  period  covered  by  the  report  on  account  of  expenses, 
taxes,  and  other  items.  Enter  the  amount  of  the  taxes  as- 
sessed against  the  bank,  whether  paid,  or  set  apart  but  not  yet 
paid.  Taxes  assessed  against  the  individual  shareholders,  but 
paid  by  the  bank  for  them,  should  not  be  entered  in  this  item, 
but  should  be  treated  as  part  of  the  dividend. 

The  sum  of  items  5,  6,  and  7  is  to  be  carried  out  opposite 
item  7  and  deducted  from  the  sum  of  items  1,  2,  3,  and  4  car- 
ried out  opposite  item  4,  which  deduction  will  give  the  net 
earnings  at  the  disposal  of  the  bank,  to  be  accounted  for  in 
items  8,  9,  and  10,  as  follows: 

8.  Dividend. — Enter  the  rate  per  cent,  of  the  dividend,  if 
any,  for  the  period  covered  by  the  report,  the  capital  of  the 
bank,  and  the  amount  of  the  dividend  at  the  rate  given. 


148 

9.  Surplus  Fund. — Enter  the  amount,  if  any,  carried  to  sur- 
plus fund  for  the  period  covered  by  the  report. 

The  amount  carried  to  surplus  fund  whenever  a  dividend  is 
made  must  be  equal  to  at  least  one-tenth  of  the  net  earnings 
of  the  bank  since  its  last  dividend  until  the  fund  shall  equal 
twenty  per  cent,  of  the  capital.     (Sec.  5199,  R.  S.) 

10.  Undivided  Profits. — Enter  the  amount  of  earnings,  other 
than  the  surplus  fund,  remaining  after  providing  for  the  divi- 
dend and  the  requisite  addition  to  the  surplus  fund. 

The  sum  of  items  8,  9,  and  10  is  to  be  carried  out  opposite 
item  10,  and  must  equal  the  amount  previously  carried  out  op- 
posite item  7.     (See  above.) 

11.  Total  Profits. — Enter  the  amount  of  the  net  earnings  of 
the  bank  since  its  organization  as  a  National  bank,  which  must 
equal  the  sum  of  the  dividends  paid,  added  to  the  surplus  fund, 
and  the  undivided  earnings  on  hand. 

1 2.  Profits  ofi Old  Organization.  — Enter  the  amount  of  profits 
transferred  to  the  National  bank  by  its  predecessor,  if  any,  if 
a  previously  existing  association  was  converted  into  the  Na- 
tional bank. 

13.  Total  Dividends. — Enter  the  total  amount  of  all  divi- 
dends made  since  the  organization  of  the  National  bank,  but 
do  not  include  any  dividends  made  by  an  association  converted 
into  the  National  bank  prior  to  such  conversion. 

14.  Total  Surplus. — Enter  the  amount  to  the  credit  of  the 
surplus  fund  at  the  date  of  the  report. 

15.  Total  Profits. — Enter  the  amount  of  all  earnings  on  hand 
at  the  date  of  the  report,  other  than  the  surplus  fund,  which 
amount  will  equal  that  of  item  10  above. 

The  sum  of  items  13,  14,  and  15  is  to  be  carried  out  oppo- 
site item  15,  and  must  equal  the  amount  entered  for  item  n, 
or  if  there  be  an  amount  entered  for  item  12,  it  must  equal  the 
sum  of  items  11  and  12,  which  is  to  be  carried  out  opposite 
item  12. 

16.  Net  Profits. — Enter  the  amount  of  the  net  earnings  of 
the  bank  since  its  last  previous  report. 

Reports  of  dividends  and  earnings  must  be  verified  by  the 
oath  or  affirmation  of  the  president  or  cashier  and  the  acknowl- 
edgment made  before  an  officer  duly  authorized  to  administer 


149 

oaths,  as  indicated  by  the  forms  furnished.  If  acknowledged 
before  a  notary  public,  his  notarial  seal  must  be  attached  to 
or  stamped  upon  the  report. 

The  reports  should  be  promptly  made  out,  and  forwarded  to 
the  Comptroller  immediately  after  the  expiration  of  the  periods 
for  which  he  has  been  previously  notified  that  the  dividends 
and  earnings  of  the  bank  will  be  reported,  as  the  law  imposes 
a  penalty  of  $100  for  each  day's  delay.     (Section  5213,  R.  S.) 

Appointments  and  Changes  of  Officers  of  National  Banks. 

It  is  necessary  that  the  name  and  official  signature  of  every 
National  bank  officer  shall  be  known  in  the  office  of  the  Comp- 
troller, and,  therefore,  the  following  rule  has  been  adopted : 

RULE. 

No  attention  will  be  given  to  any  order,  direction,  or  com- 
munication received  in  this  office,  signed  by  any  person  as  an 
officer  of  a  National  bank,  unless  this  office  has  been  officially 
notified  of  the  appointment  or  election  of  such  person  as  an 
officer  of  the  bank ;  and  all  communications  from  this  office  to 
National  banks  will  be  directed  to  the  persons  of  whose  elec- 
tion or  appointment  notice  was  last  received. 

Notices  of  election  or  appointment  of  officers  must  be  sepa- 
rate from  all  other  communications,  and  authenticated  by  the 
seals  of  the  banks,  and,  so  far  as  possible,  by  the  signatures  of 
the  retiring  officers,  and  accompanied  by  the  official  signatures 
of  the  new  officers. 

The  following  is  the  form  in  which  information  of  changes 
of  officers  is  to  be  given,  and  to  secure  uniformity  it  is  re- 
quested that  notices  of  changes  be  given  on  the  blanks  pre- 
pared by  the  Comptroller,  which  will  be  furnished  whenever 
desired  and  whenever  he  shall  become  aware  of  the  necessity 
of  doing  so: 

Fo7-m  of  Notice  of  Change  of  Officers. 

Below  appear  the  official  signatures  of  the  president,  vice-president,  cashier,  and 
assistant  cashier  of  The  National  Bank  of  (made  at  the  regular  an- 
nual meeting  of  the  stockholders  for  the  year ).:: 

[Signatures  of  new  officers.] 
[Signatures  of  retiring  officers.] 
Note. — The  signatures  of  vice-president  and  assistant  cashier  must  be  given,  if 
there  be  such  an   officer. 

"•The  words  in  parenthesis  can  be  stricken  out  when  any  change  of  officers  is 
made  at  a  time  other  than  the  annual  meeting  of  stockholders. 


150 

Extension  of  Charters. 

The  Act  of  July  12th,  1882,  provides  for  the  extension  of  the 
corporate  existence  of  National  banking  associations  whose 
periods  of  succession  are  about  to  expire.  All  National  banks 
now  in  existence  which  have  not  already  extended  under  this 
Act,  were  originally  organized  under  the  provisions  of  the  Act 
of  June  3d,  1874.  Section  8  of  the  last-named  Act,  and  Sec- 
tion 5136  of  the  Revised  Statutes  of  the  United  States,  pro- 
vides that  all  associations  organized  under  it  shall  have  suc- 
cession for  twenty  years  from  the  date  of  the  execution  of  their 
organization  certificates.  The  officers  of  a  National  bank  can 
therefore  tell  the  date  of  expiration  of  their  association  by 
taking  that  of  the  execution  of  its  organization  certificate  and 
adding  twenty  years  thereto.  If  the  paper  is  lost,  or  the  date 
in  any  way  uncertain,  information  can  be  obtained  on  appli- 
cation to  the  Comptroller  of  the  Currency.  Under  the  Act  of 
July  12th,  1882,  and  the  regulations  of  the  Comptroller's  office, 
banks  are  permitted  to  file  their  application  for  extension  with 
the  proper  papers  at  any  time  within  six  months  prior  to  their 
expiration,  and  the  necessary  blank  will  be  sent  from  that 
office  a  sufficient  time  in  advance  to  enable  them  to  do  so. 

The  following  are  copies  of  the  forms : 

Amendment  to  Articles  of  Association. 

National  Bank  . 

In  accordance  with  and  in  pursuance  of  the  provisions  of  "An  Act  to  enable  Na- 
tional Banking  Associations  to  extend  their  corporate  existence,  and  for  other  pur- 
poses," approved  July  12th,  1882,  we,  the  undersigned,  shareholders  of  "  The ," 

located  at ,  in  the  county  of  and  State  of  ,  owning  the  shares 

of  the  capital  stock  of  said  association  set  opposite  our  respective  names,  aggregat- 
ing not  less  than  two-thirds  of  the  stock  of  said  association,  the  total  number  of 
shares  representing  the   capital  stock  of  said   National  banking  association  being 

shares,  do  hereby  consent  and  agree  that  the  article  of  the  articles 

of  association  of  said  National  banking  association  be,  and  is  hereby,  amended  to 
read  as  follows : 

"This  association  shall  continue  until ,  19 — ,  unless  sooner  placed  iu  vol- 
untary liquidation  by  the  act  of  its  shareholders  owning  at  least  two-thirds  of  its 
stock,  or  otherwise  dissolved  by  authority  of  law." 

In  witness  whereof,  we,  the  undersigned,  have  hereto  set  our  hands. 


Date 
of  Signing. 


Name. 


Address. 


No.  of  Shares. 


i5i 

National  Bank 


Sir:  I  do  hereby  certify,  in  pursuance  of  the  provisions  of 'An  Act  to  enable 
National  Banking  Associations  to  extend  their  corporate  existence,  and  for  other 
purposes,"  approved  July  12th,  1882,  that  the  amendment  of  the  articles  of  association 

to  which  this  certificate  is  attached  of  "  The ,"  and  the  consent  to  the  same  in 

writing,  was  executed  in  duplicate  by  shareholders  owning  not  less  than  two-thirds 
of  the  stock  of  said  bank;  and  I  do  further  certify  that  the  signatures  of  the  share- 
holders to  said  consent  and  said  amendment  of  the  articles  of  association  are  the 
true  and  correct  signatures  of  said  shareholders  or  of  their  lawfully  appointed  attor- 
neys ;  and  that  one  of  the  instruments  so  executed  is  the  foregoing,  and  that  the 
other,  in  all  respects  like  the  foregoing,  is  on  file  in  said  bank. 

[seal  of  bank.]  , 

President  or  Cashier. 
To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 


It 


Sir  :  I  certify  that  the  said  amendment  to  the  articles  of  association  of  "  The 
"  was  duly  recorded  upon  the  minute-book  of  said  association  on  the 


day  of ,  18 — ,  and  that  the  above  certificate  was  certified  under  the  seal  of 

the  association  in  accordance  with  a  resolution  of  its  board  of  directors,  duly  adopted 

at  a  meeting  of  said  directors  on  the  —  day  of ,  18 — . 

[seal  of  bank.]  , 


Cashier. 


To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 


National  Bank 


,  188-. 

Sir  :  I  hereby  request  the  Comptroller  of  the  Currency  to  approve  the  enclosed 
amendment  of  the  articles  of  association  of  this  bank,  extending  its  corporate 
existence  for  twenty  years,  pursuant  to  the  provisions  of  the  Act  of  Congress 
entitled  <:An  Act  to  enable  National  Banking  Associations  to  extend  their  corporate 
existence,  and  for  other  purposes,"  approved  July  12th,  1882. 

The  amendment  is  accompanied  by  the  certificate  required  by  law. 

Very  respectfully,  , 

President  or  Cashier. 
To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 

The  law  does  not  require  that  a  meeting  of  the  stockholders 
shall  be  held;  it  is  sufficient  to  secure  the  consent  of  those 
representing  two-thirds  of  the  stock,  and  this  may  be  done  by- 
sending  in  advance  to  each  stockholder  a  power  of  attorney  to 
be  signed  and  returned  by  him,  some  person  other  than  any 


VNIYERSfTY   ) 

. .     ■ 


152 

officer  of  the  bank  being  empowered  to  act  as  attorney.  The 
following  form  may  be  used  for  this  purpose: 

Know  all  men  by  these  presents : 

That    I,  ,  of  ,  hereby  constitute    and    appoint    irrevocably  

my  true  and  lawful  attorney,  for  me  and  in  nay  name  and  stead  to  sign  all  necessary 
papers  in   connection  with  the  extension  of  the  corporate  existence  of  the  , 

under  the  Act  of  Congress  approved  July  12th,  1882,  and  I  hereby  consent  that  the 

article  of  the  articles  of  association  of  The be  so  amended  as  to  read 

as  follows  : 

"  This  association  shall  continue  until  close  of  business  on ,  unless  sooner 

placed  in  voluntary  liquidation  by  the  act  of  its  shareholders  owning  at  least  two- 
thirds  of  its  stock,  or  otherwise  dissolved  by  authority  of  law." 

Hereby  granting  unto  my  said  attorney  full  power  and  authority  to  act  in  and 
concerning  the  premises  as  fully  and  effectually  as  I  might  do  if  personally  present. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal  this day  of 1 

in  the  year  one  thousand  eight  hundred  and  eighty-two. 


Signed  and  sealed  in  presence  of 


These  powers  of  attorney,  signed  by  the  stockholders,  should 
be  sent  to  the  Comptroller  with  the  amendment  to  the  articles 
of  association  on  which  their  names,  signed  by  their  authorized 
attorneys,  appear. 

If  preferred,  a  stockholders'  meeting  may  be  called  for  a 
convenient  date  in  order  to  vote  for  the  extension  and  to  sign 
the  necessary  papers. 

Notice  of  the  meeting  should  be  sent  by  mail  to  each  stock- 
holder, and  may  also  be  announced  by  publication.  At  this 
meeting  the  stockholders  may  appear  in  person  or  by  attorney, 
the  power  given  to  the  latter  being  similar  in  form  to  that 
inserted  above.  In  executing  and  forwarding  the  papers  the 
following  instructions  must  be  strictly  observed: 

The  certificate  of  the  president  or  cashier,  certifying  that 
stockholders  owning  at  least  two-thirds  of  the  stock  have  con- 
sented, in  writing,  to  the  amendment,  should  be  executed,  in 
duplicate,  and  one  copy  transmitted  to  the  Comptroller,  together 
with  the  letter  applying  for  approval  of  the  Comptroller,  at 
least  one  month  previous  to  the  expiration  of  the  corporate 
existence  of  the  bank,  in  order  that  the  Comptroller  may  have 
sufficient  time  to  cause  the  special  examination  to  be  made, 
as  required  by  Section  3  of  the  Act. 

If  any  shares  of  the  bank  stand  in  the  name  of  administrat- 
ors, executors,  trustees,  or  guardians,  and  it  becomes  necessary 


*53 

to  have  the  vote  of  these  shares  to  make  up  the  majority  re- 
quired to  authorize  the  amendment,  duly  certified  copies  of 
the  legal  appointment  of  such  administrators,  executors,  trust- 
ees, or  guardians  should  be  forwarded  to  the  Comptroller. 

When  stock  voted  for  the  amendment  stands  in  the  name  of 
an  assignee  there  must  be  evidence  showing  that  the  shares  of 
stock  have  been  regularly  transferred  to  him,  as  such  assignee, 
on  the  books  of  the  bank.  When  the  amendment  is  si°med 
by  an  attorney  acting  for  shareholders,  properly  executed 
powers  of  attorney  must  be  furnished. 

Soon  after  the  papers,  properly  executed,  have  been  received 
in  his  office,  the  Comptroller  will  order  the  special  examina- 
tion required  by  Section  3.  This  examination  must  be  paid 
for  by  the  bank,  and  if  the  report  is  favorable  the  Comptroller 
will  issue  his  certificate  of  extension.  After  the  extension  has 
been  granted,  the  law  requires  that  all  circulating  notes  issued 
to  the  bank  after  the  date  at  which  the  new  period  of  succes- 
sion begins  shall  be  of  different  devices  from  those  issued  be- 
fore; and  this  necessitates  the  procuring  of  new  plates,  which 
will  be  prepared  at  the  expense  of  the  bank.  This  expense 
will  be  $50  for  each  plate  of  two  impressions  and  $75  for  each 
plate  of  four.     (See  page  119.) 

A  blank  to  enable  banks  to  order  the  preparation  of  plates 
for  the  printing  of  new  circulation  will  be  furnished,  and  the 
order  should  be  made  out  and  sent  with  the  application  for 
extension. 

No  transfers  of  bonds  are  necessary,  as  the  extended  asso- 
ciation is  in  all  respects  identically  the  same  as  before  exten- 
sion, and  is  merely  placed  in  the  same  position  as  if  the  law 
had  allowed  it  at  the  outset  forty  years  from  the  date  of  its 
organization,  of  which  twenty  have  expired.  The  new  circu- 
lating notes  will  be  issued  as  the  old  come  in  by  the  usual 
course  of  redemption,  until  the  end  of  three  years  from  the 
date  of  extension,  when  the  law  requires  the  bank  to  deposit 
lawful  money  for  the  redemption  of  such  portion  of  the  old 
circulation  as  may  then  remain  outstanding.  As  new  circula- 
tion will  be  immediately  issued  in  place  of  that  for  which  law- 
ful money  is  thus  deposited,  there  need  be  little  inconvenience 
on  this  account.     All  that  is  necessary  is  to  see  that  the  print- 


i54 

ing  of  circulation  in  blank  is  ordered  in  advance,  so  that  it 
may  be  ready  when  wanted. 

officers'  bonds. 
Although  the  bank  is  the  same  bank  after  extension  as  be- 
fore, it  is  necessary  to  renew  the  bonds  of  the  officers,  tellers, 
&c.  If  this  is  not  done,  it  would  be  difficult  to  hold  the  sure- 
ties, as  bondsmen  signing  before  the  extension  could  not  be 
held  to  have  contemplated  the  existence  of  the  bank  for  a 
longer  term  than  twenty  years. 

STOCKHOLDERS   NOT  DESIRING  TO   EXTEND  THE  ASSOCIATION. 

Some  stockholders  may  not  vote  for  the  extension,  and  some 
may  wish  to  withdraw  the  amount  of  their  stock.  Section  5 
of  the  Act  of  July  12th,  1882,  provides  what  shall  be  done  in 
such  cases.     (See  p.  107.) 

The  foregoing  instructions  apply  to  the  extension  of  the 
bank  on  a  condition  which  legally  is  in  all  respects  identical 
to  what  it  was  at  its  first  organization. 

It  may,  however,  be  deemed  best  by  those  principally  inter- 
ested in  National  banking  associations  about  to  expire  not  to 
avail  themselves  of  the  foregoing  method.  The  reasons  for 
this  are  obvious.  In  a  twenty  years'  life  the  personnel  of  the 
stockholders  of  an  association  undergoes  great  changes.  The 
stock  which  was  originally  in  the  hands  of  active  resident 
business  men,  who  brought  custom  and  business  to  the  bank, 
by  various  vicissitudes  falls  into  the  possession  of  widows, 
heirs,  and  non-residents,  whose  only  interest  in  the  institution 
is  to  draw  dividends.  The  active  stockholders  remaining  in 
such  associations  will  doubtless  prefer  in  many  instances  to  let 
the  old  association  expire,  and,  with  their  proportion  of  the 
capital,  joining  with  themselves  other  new  capitalists  such  as 
they  may  think  will  add  strength,  form  a  new  association  to 
occupy  the  place  vacated  by  that  which  has  expired.  A  pro- 
viso in  Section  5  of  the  Act  of  July  12th,  1882,  prevents  the 
use  of  the  old  name  for  such  a  new  association  unless  all  the 
stockholders  in  the  old  bank  are  assigned  shares  in  the  new 
bank  proportionately  to  those  they  held  in  the  old.  It  will 
therefore  be  necessary  to  take  a  new  name  in  such  cases. 

The  new  associates  should  make  application  to  the  Comp- 


155 

troller,  obtain  the  new  name  desired,  execute  articles  of  asso- 
ciation and  an  organization  certificate,  and  file  these  papers, 
with  an  order  for  circulation,  in  the  office  of  the  Comptroller 
of  the  Currency  about  a  month  prior  to  the  expiration  of  the 
existence  of  the  old  bank.  Fifty  per  cent,  of  the  capital 
should  be  paid  in,  so  as  to  be  certified  to  the  Comptroller  at 
the  same  time  bonds  are  deposited,  which  should  be  done  a 
few  days  before  the  old  bank  expires.  Everything  being  ready, 
the  new  bank  can  be  authorized  to  commence  business  not 
later  than  the  day  of  the  expiration  of  the  old  association. 

The  Act  of  July  12th,  1882,  also  provides  that  the  liquida- 
tion of  the  old  association  may  be  legally  continued  after  its 
expiration,  and  its  franchise  is  extended  for  this  sole  purpose 
until  all  its  assets  are  sold  and  the  proceeds  distributed  among 
its  creditors  or  stockholders.  The  liquidation  is  to  be  super- 
intended by  its  board  of  directors,  and  the  board  should  be 
kept  up  in  the  same  manner  as  in  a  bank  doing  business,  until 
all  moneys  have  been  collected  and  distributed. 

The  stockholders  of  the  new  bank  can  put  into  it  such 
moneys  as  they  derive  from  the  old.  The  assets  of  the  old 
bank  can  be  sold  in  such  manner  by  its  directors  as  will  realize 
the  most  for  its  stockholders,  and  in  many  instances  it  is  ad- 
vantageous to  sell  to  the  new  bank  such  portion  as  can  be 
legally  taken  by  it.  It  cannot  take  any  real  estate  except 
banking  house.  It  is  likewise  forbidden  to  take  real  estate 
paper  or  mortgages,  or  mortgage  paper;  and  it  cannot,  of  course, 
take  any  paper  or  assets  of  any  kind  known  to  be  bad  or  worth- 
less. No  old  stockholder  can  be  compelled  to  take  stock  in 
the  new  bank,  and  no  transfers  of  deposits  can  be  made  from 
the  books  of  the  old  bank  to  those  of  the  new  without  the  con- 
sent of  the  depositors,  manifested  by  their  deposit  of  checks  on 
the  old  bank. 

A  complete  set  of  new  books  must  be  opened  by  the  new 
institution. 

Banks  permitting  their  corporate  existence  to  expire  without 
extension  are  required  to  furnish  the  following  notice  to  the 
Comptroller's  office.  (See  Section  7,  Act  of  July  12th,  1882, 
page  107.) 


156 

National  Bank 


(  188- 

To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir:  It  is  hereby  certified,  in  pursuance  of  Sections  5220  and  5221  of  the  Revised 

Statutes  of  the  United  States,  that  the  corporate  existence  of  "  The ,"  located 

at ,  in  the  State  of  ,  having  expired  at  close  of  business  on  the  

day  of ,  188-,  the  bank  is  now  closing  its  affairs  under  the  provisions  of  Sec- 
tion 7  of  the  Act  of  July  12th,  1882. 

In  testimony  whereof,  I  have,  by  instruction  of  the  board  of  directors  of  said  asso- 
ciation, hereto  subscribed  my  name  and  affixed  the  seal  of  said  association  at  ^—^— 
aforesaid,  the  day  and  year  above  written. 

[seal  of  the  bank.]  , 

President  or  Cashier. 


NOTICE. 

The National  Bank ,  located  at ,  in  the  State  of  ,  is 

closing  up  its  affairs,  its  corporate  existence  having  expired  at  close  of  business  on  the 
day  of  ,  188-.  All  noteholders  and  others,  creditors  of  said  associa- 
tion, are  therefore  hereby  notified  to  present  the  notes  and  other  claims  against  the 
association  for  payment. 


President  or  Cashier. 
Dated ,  188-. 

Note. — The  above  notice  to  be  published  for  a  period  of  two  months  in  a  news- 
paper in  the  city  of  New  York,  and  also  in  a  newspaper  published  in  the  place  in 
which  the  bank  is  located.     See  Sec.  5221,  R.  S. 


SUGGESTIONS    FOR    THE    MANAGEMENT   OF    NATIONAL 

BANKS. 

Have  the  organization  papers  and  the  proceedings  of  stock- 
holders in  the  first  election  of  directors  fully  recorded  in  the 
minute-book,  so  that  there  may  be  in  permanent  form  a  com- 
plete history  of  the  organization  of  the  bank. 

The  by-laws  and  all  proceedings  at  meetings  of  directors 
and  of  stockholders  should  also  be  recorded  in  the  minute- 
book.  These  records  should  set  forth  the  appointment  of  the 
judges  of  elections  for  directors,  the  returns  of  the  judges,  the 
fact  that  the  directors  qualified  by  taking  the  prescribed  oath, 
the  appointment  of  officers,  the  bonds  required  of  them,  and 
the  approval  thereof  by  the  directors;  and,  in  short,  all  mat- 
ters pertaining  to  the  original  organization  of  the  bank,  and 


i57 

the  subsequent  proceedings  of  the  directors  for  the  supervision 
and  management  of  its  affairs. 

The  business  of  the  bank  should  be  carefully  and  promptly 
conducted,  the  cash  carefully  assorted,  and  all  accounts  so  kept 
and  balanced  as  to  show  the  condition  of  the  bank  at  the  close 
of  each  day,  in  order  that  the  reports  required  by  the  Comp- 
troller of  the  Currency  may  at  all  times  be  prepared  for.  As 
often  as  every  quarter  a  committee  of  directors,  appointed  for 
the  purpose,  should  make  a  careful  examination  of  the  affairs 
of  the  bank,  and  a  report  thereof  should  be  entered  upon  the 
minute-book. 

The  officers,  other  than  the  president,  should  be  appointed 
to  hold  their  offices  indefinitely,  and  their  bonds  should  be 
executed  accordingly,  so  as  to  obviate  the  necessity  of  requiring 
annual  bonds  from  them,  and  to  prevent  the  occurrence  of  a 
time  when  they  will  not  be  under  bond. 

Presidents  being  annually  appointed,  should  be  required  to 
give  annual  bonds;  and  whenever  any  officer  is  appointed  or 
reappointed  a  bond  should  be  required  of  him.  It  will  be 
found  the  best  policy  to  pay  all  officers  and  other  employees 
liberal  but  not  extravagant  salaries,  so  as  to  remove  from  them 
the  temptation  of  speculating  with  or  otherwise  wrongly  using 
the  bank's  funds. 

Require  ample  and  undoubted  security,  of  a  readily  con- 
vertible character  if  in  the  shape  of  collaterals,  for  all  loans. 
Do  nothing  to  foster  or  encourage  speculation,  but  give  facili- 
ties only  to  legitimate  business  operations.  Make  loans  and 
discounts  on  as  short  time  as  the  needs  of  customers  will  per- 
mit, and  insist  upon  the  payment  of  all  paper  at  maturity,  if 
possible,  whether  the  bank  needs  the  money  or  not.  Bor- 
rowers should  not  be  encouraged  to  expect  extensions  and  re- 
newals of  their  paper  to  suit  their  own  convenience.  Such 
favors  are  not  the  attributes  of  good  banking,  the  proper 
foundation  of  which  is  impartiality  of  treatment,  and  the  ex- 
action of  the  performance  of  contracts.  Never  renew  a  note 
or  bill,  or  allow  it  to  lie  unpaid,  merely  because  the  money 
cannot  for  the  moment  be  placed  with  equally  good  advantage, 
for  it  is  only  by  always  requiring  prompt  settlements  that  the 
discount  line  can  be  controlled,  and  made  at  all  times  reliable. 


153 

Distribute  the  accommodations  of  the  bank  as  widely  as  possi- 
ble, rather  than  concentrate  them  in  a  few  hands;  for  large 
loans,  though  sometimes  proper,  are  generally  injudicious,  and 
frequently  unsafe,  for  large  borrowers  are  apt  to  dictate  their 
own  terms  as  regards  payment;  and  when  this  is  the  relation 
between  a  bank  and  xts  customer,  the  former  is  pretty  sure 
to  be  the  sufferer. 

Every  dollar  of  depositors'  money  loaned  by  a  bank  is  owed 
for,  and  its  managers  are  therefore  under  the  strongest  obliga- 
tions to  its  creditors  as  well  as  to  stockholders  to  keep  its  dis- 
counts under  their  own  control. 

Treat  customers  as  liberally  as  may  be  consistent  with  pru- 
dence and  strict  compliance  with  law,  bearing  in  mind  that  a 
bank  usually  prospers  as  its  customers  prosper,  but  never  per- 
mit them  to  dictate  the  policy  to  be  pursued  in  the  manage- 
ment, and  never  so  extend  accommodations  to  them  as  to  trench 
upon  the  requirements  of  law  in  any  respect.  If  there  be  any 
doubt  as  to  the  security  or  the  propriety  of  discounting  any 
paper  offered,  give  the  bank  the  benefit  of  the  doubt  and  re- 
fuse it.  If  there  be  reason  to  doubt  the  integrity  of  a  customer, 
close  his  account;  for  the  risk  of  dealing  with  persons  of  doubt- 
ful integrity  is  seldom  or  never  compensated  by  the  profits  of 
their  business.  Treat  all  customers  with  strict  impartiality, 
and  in  fixing  the  line  of  accommodation  to  be  extended  to 
any  one,  be  governed  solely  by  the  value  of  his  account. 

Do  not  let  political  or  other  prejudices  influence  the  conduct 
of  the  affairs  of  the  bank,  but  manage  it  as  a  business  institu- 
tion, for  the  benefit  of  the  community  and  the  profit  of  the 
stockholders. 

The  capital  of  a  bank  should  be  a  reality  and  not  a  fiction, 
and  it  should  be  owned  by  those  who  have  money  to  lend  and 
not  by  borrowers.  No  bank  can  have  a  prosperous  career  if 
its  stockholders  take  out  in  loans  the  money  they  have  put  in 
as  capital,  for  such  a  bank,  being  rendered  unable  to  accom- 
modate the  business  public  outside  of  its  owners,  loses  one 
of  the  principal  elements  of  success. 

It  should  be  the  chief  aim  of  bank  managers  to  make  their 
respective  institutions  strong,  and  to  keep  them  free  from  un- 
available and  undesirable  assets.     Not  only  should  the  capital 


159 

be  kept  unimpaired,  but  a  surplus  fund  should  be  created  from 
the  earnings  that  will  be  a  protection  to  the  capital  and  to 
creditors  in  the  trying  times  that  sooner  or  later  overtake  all 
banking  institutions.  There  are  few  items,  if  any,  that  look 
better  upon  a  balance  sheet  of  a  bank  than  a  large  surplus,  and 
none  that  is  so  well  calculated  to  secure  for  it  public  confi- 
dence; and  it  is  therefore  on  all  accounts  the  best  policy  to 
accumulate  such  a  fund  as  rapidly  as  possible,  even  if  dividends 
to  stockholders  have  to  be  kept  down  to  a  low  rate  for  a  time. 
Do  a  straightforward,  legitimate  and  upright  business,  and 
never  be  tempted  by  the  prospect  of  large  gains  to  engage  in 
operations  not  sanctioned  by  prudence,  or  by  the  provisions 
of  the  laws  for  the  government  of  National  banks. 

REGULATIONS  OF  U.  S.  TREASURY  GOVERNING  ISSUE 

AND  REDEMPTION  OF  CURRENCY  AND  COINS  OF 

UNITED  STATES,  AND  REDEMPTION  OF 

NATIONAL  BANK  NOTES. 


I. — ISSUE  OF   UNITED  STATES   NOTES. 

i.  The  Treasurer  will  forward  new  United  States  notes  to 
Assistant  Treasurers  of  the  U.  S.  upon  their  making  requisi- 
tions, which  are  to  be  approved  by  him,  for  such  denomina- 
tions as  may  be  needed  in  the  current  business  of  their  offices. 

2.  Upon  receiving  U.  S.  notes  unfit  for  circulation,  National 
bank  notes,  fractional  silver  coin,  or  minor  coin,  the  Treasurer 
will  forward  new  U.  S.  notes  by  express,  at  the  expense  of  the 
consignee,  or  by  registered  mail,  free  of  charge,  at  the  risk  of 
the  consignee. 

II. — ISSUE   OF   GOLD   COIN. 

3.  Upon  receiving  an  original  certificate  of  the  Assistant 
Treasurer  in  New  York  for  a  deposit  of  $100,  or  any  multiple 
of  $100,  in  U.  S.  notes,  made  for  the  credit  of  the  Treasurer  in 
general  account,  the  Treasurer  will  cause  a  like  amount  in 
gold  coin  to  be  sent  from  the  mint  at  Philadelphia,  at  the  con- 
signee's expense. 

III. — ISSUE   OF   STANDARD  SILVER   DOLLARS. 

4.  Upon  the  receipt  of  currency  or  gold  coin,  the  Treasurer 
or  an  Assistant  Treasurer  will  cause  to  be  paid  to  applicants 


i6o 

in  cities  where  their  respective  offices  may  be  situated  stand- 
ard silver  dollars  in  any  desired  amount. 

5.  Standard  silver  dollars  are  forwarded  to  applicants  out- 
side of  cities  in  which  the  Treasurer  or  an  Assistant  Treasurer 
may  be  situated,  at  the  expense  of  the  Government,  in  sums 
or  multiples  of  $500 — 

I.  Upon  the  receipt  by  the  Treasurer  of  an  original  certifi- 
cate issued  by  any  Assistant  Treasurer  or  National  bank  de- 
positary that  a  deposit  of  currency  or  gold  coin  has  been  made 
to  the  credit  of  the  Treasurer  in  general  account.  Deposits 
with  the  Assistant  Treasurer  in  New  York  may  be  made  by 
drafts  payable  to  his  order,  and  collectible  through  the  clearing- 
house, forwarded  directly  to  him,  with  instructions  to  deposit 
the  amounts  on  account  of  standard  silver  dollars,  and  to  for- 
ward the  certificates  therefor  to  the  Treasurer.  Upon  the  receipt 
by  the  Treasurer  of  gold  coin,  U.  S.  notes,  silver  certificates, 
or  National  bank  notes. 

II.  By  the  Treasurer  or  any  Assistant  Treasurer,  by  regis- 
tered mail,  free  of  charge,  in  sums  or  multiples  of  $65,  at  the 
risk  of  the  party  to  whom  sent,  upon  receipt  of  gold  coin,  U.  S. 
notes,  silver  certificates,  or  National  bank  notes. 

IV. — ISSUE   OF   FRACTIONAL  SILVER   COIN. 

6.  The  Treasurer  and  Assistant  Treasurers  of  the  U.  S.  will 
pay  out  fractional  silver  coin,  in  any  sum  desired,  for  lawful 
money  of  the  U.  S. 

7.  Fractional  silver  coin  will  be  forwarded  from  the  office 
nearest  to  the  place  of  its  destination,  by  express,  at  the  ex- 
pense of  the  Government,  in  sums  or  multiples  of  $500 — 

I.  Upon  receipt  of  an  original  certificate  issued  by  the 
Treasurer,  an  Assistant  Treasurer,  or  National  bank  depositary, 
that  a  deposit  of  currency  or  gold  coin  has  been  made  to  the 
credit  of  the  Treasurer  in  general  account.  Deposits  with  the 
Assistant  Treasurer  in  New  York  may  be  made  by  drafts  paya- 
ble to  his  order,  and  collectible  through  the  clearing-house, 
forwarded  directly  to  him,  with  instructions  to  deposit  the 
amounts  on  account  of  fractional  silver  coin,  and  to  forward 
the  certificates  to  the  office  nearest  the  destination  of  the  coin. 

II.  By  the  Treasurer  or  any  Assistant  Treasurer,  by  regis- 


i6i 

tered  mail,  free  of  charge,  in  sums  or  multiples  of  $70,  at  the 
risk  of  the  party  to  whom  sent,  upon  the  receipt  of  currency 
or  gold  coin. 

V. — ISSUE   OF   MINOR   COIN. 

8.  The  Treasurer  and  Assistant  Treasurers  will  pay  out,  for 
lawful  money,  any  minor  coin  not  needed  in  the  current  busi- 
ness of  their  offices. 

VI. — ISSUE   OF  THE   TREASURER'S   TRANSFER  CHECKS. 

9.  The  Treasurer  will  issue  transfer  checks,  in  payment  for 
redemptions,  on  such  Assistant  Treasurer  as  may  suit  the  con- 
venience of  the  Treasury,  payable  to  the  order  of  the  sender 
or  his  correspondent — 

I.  For  U.  S.  notes  sent  to  the  Treasurer,  with  the  express 
charges  prepaid  at  private  rates,  or  by  mail,  in  sums  of  $5  or 
more. 

II.  For  National  bank  notes  sent  to  the  Treasurer.  For 
notes  sent  from  a  city  where  there  is  an  Assistant  Treasurer, 
checks  will  be  issued  only  on  the  Assistant  Treasurer  in  that 
city. 

III.  For  fractional  silver  coin  sent  in  multiples  of  $20  to  the 
Treasurer,  and  for  minor  coin  sent  to  the  Treasurer  or  an 
Assistant  Treasurer. 

VII. — REDEMPTION  OF  U.  S.  NOTES,  GOLD   CERTIFICATES  (1882), 
SILVER   CERTIFICATES,    AND   FRACTIONAL   CURRENCY. 

10.  U.  S.  notes,  each  exceeding  nine-tenths  of  its  original 
proportions  in  one  piece,  are  redeemable  at  their  full  face  value 
in  other  U.  S.  notes  by  the  Treasurer  and  the  several  Assistant 
Treasurers  of  the  United  States,  and  are  redeemable  in  coin, 
in  sums  not  less  than  $50,  by  the  Assistant  Treasurer  in  New 
York. 

11.  Fractional  notes,  each  exceeding  four-fifths  of  its  origi- 
nal proportions  in  one  piece,  are  redeemable  at  their  full  face 
value  in  U.  S.  notes,  in  sums  not  less  than  $3,  by  the  Treas- 
urer and  the  several  Assistant  Treasurers  of  the  U.  S. 

12.  Gold  certificates,  each  exceeding  nine-tenths  of  its  orig- 
inal proportions  in  one  piece,  are  redeemable  at  their  full  face 
value  by  the  Treasurer  and  the  several  Assistant  Treasurers  of 
the  U.  S. 

11 


l62 

13.  Silver  certificates,  each  exceeding  nine-tenths  of  its 
original  proportions  in  one  piece,  are  redeemable  at  their  full 
face  value  in  standard  silver  dollars  by  the  Treasurer  and  the 
several  Assistant  Treasurers  of  the  U.  S. 

14.  U.  S.  notes,  gold  certificates,  and  silver  certificates  are 
redeemable,  by  the  Treasurer  only,  when  mutilated  to  the  ex- 
tent of  one-tenth,  but  not  two-tenths,  at  nine-tenths  of  their 
face  value;  two-tenths,  but  not  three-tenths,  at  eight-tenths  of 
their  face  value;  three-tenths,  but  not  four-tenths,  at  seven- 
tenths  of  their  face  value;  four- tenths,  but  not  one-half,  at  six- 
tenths  of  their  face  value.  Fragments  of  notes,  each  consti- 
tuting clearly  one-half,  are  redeemable  at  one-half  the  full  face 
value  of  such  whole  notes. 

15.  Fractional  currency  notes  are  redeemable,  by  the  Treas- 
urer only,  when  mutilated  to  the  extent  of  one-fifth,  but  not 
two-fifths,  at  four-fifths  of  their  full  face  value;  two-fifths,  but 
not  one-half,  at  three-fifths  of  their  face  value. 

16.  Fragments  less  than  one-half  are  redeemed  only  when 
accompanied  by  an  affidavit  executed  in  accordance  with  the 
requirements  of  the  following  paragraph. 

17.  Notes  and  certificates  mutilated  as  described  in  the  pre- 
ceding paragraphs,  accompanied  by  an  affidavit  from  the 
owner,  or  from  such  other  persons  as  have  knowledge  of  the 
facts,  that  the  missing  portions  have  been  totally  destroyed, 
are,  if  the  proof  furnished  is  satisfactory,  redeemed  at  their 
full  face  value.  The  affidavit  must  state  the  cause  and  manner 
of  the  mutilation,  and  must  be  sworn  and  subscribed  before 
an  officer  qualified  to  administer  oaths,  who  must  affix  his 
official  seal  thereto,  and  the  character  of  the  affiants  must  be 
certified  to  be  good  by  such  officer  or  some  other  having  an 
official  seal.  The  Treasurer  will  exercise  such  a  discretion 
under  this  regulation  as  may  seem  to  him  needful  to  protect 
the  United  States  from  fraud. 

18.  Fragments  not  redeemable  are  rejected  and  returned; 
counterfeit  notes  are  branded  and  returned. 

VIII. — REDEMPTION   OF   NATIONAL   BANK   NOTES. 

19.  National  bank  notes  are  redeemable  by  the  Treasurer 
of  the  U.  S. ,  in  sums  of  $1000  or  any  multiple  thereof. 


i63 

20.  Notes  equalling  or  exceeding  three-fifths  of  their  origi- 
nal proportions,  and  bearing  the  name  of  the  bank  and  the 
signature  of  one  of  its  officers,  are  redeemable  at  their  full 
face  value. 

21.  Notes  of  which  less  than  three-fifths  remains,  or  from 
which  both  signatures  are  lacking,  are  not  redeemed  by  the 
Treasurer,  but  should  be  presented  for  redemption  to  the  bank 
of  issue.  Fragments  less  than  three-fifths  are  accepted  from 
the  bank  of  issue  for  face  value  by  the  Treasurer  only  when 
accompanied  by  evidence,  as  required  by  paragraph  17,  that 
the  missing  portions  have  been  entirely  destroyed. 

22.  Fragments  redeemed  by  the  bank  of  issue  for  less  than 
face  value  are  accepted  by  the  Treasurer  only  when  their  val- 
uation is  equal  to  the  face  value  of  a  note  of  some  denomina- 
tion issued  by  the  bank  or  some  multiple  thereof.  The  required 
valuation  may  be  made  up  of  several  fragments  of  notes  of  the 
same  or  different  denominations,  provided  the  total  valuation 
of  the  fragments  of  each  denomination  be  $1  or  some  multiple 
thereof.  Fragments  not  clearly  more  than  two-fifths  are  ac- 
ceptable only  when  accompanied  by  evidence,  as  required  by 
paragraph  17,  that  the  missing  portions  have  been  entirely 
destroyed. 

23.  It  having  been  decided  that  National  bank  notes  stolen 
when  unsigned,  and  put  in  circulation  with  forged  signatures, 
are  not  obligatory  promissory  notes  of  the  banks  under  section 
5182  of  the  Revised  Statutes,  they  are  not  redeemed  by  the 
Treasurer. 

24.  Notes  of  National  banks  that  have  failed  are  redeemed 
in  the  same  manner  and  on  the  same  terms  as  U.  S.  notes. 

IX. — REDEMPTION   OF   FRACTIONAL    SILVER   COIN   AND 
MINOR    COIN. 

25.  Fractional  silver  coin  and  minor  coin  may  be  presented,, 
in  separate  packages,  in  sums  or  multiples  of  $20,  assorted  by 
denominations,  to  the  Treasurer  or  any  Assistant  Treasurer, 
for  exchange  into  lawful  money. 

26.  No  mutilated  coin  will  be  redeemed.  Reduction  by 
natural  abrasion  is  not  considered  mutilation. 


164 


X. — TRANSMISSION   TO   THE  TREASURER. 

27.  The  several  kinds  of  paper  currency  should  be  forwarded 
separately.  Remittances  should  be  made  up  into  packages  of 
not  more  than  8000  notes  each.  The  notes  in  a  package  should 
be  assorted  by  denominations  and  enclosed  in  paper  straps  con- 
taining not  more  than  100  notes  each,  and  the  straps  should 
be  marked  with  the  amount  of  the  contents. 

28.  A  letter  of  advice,  giving  the  amount  of  each  denomi- 
nation of  notes,  the  total  amount  in  the  package,  the  address 
of  the  party  sending,  and  the  disposition  to  be  made  of  the 
proceeds,  should  be  enclosed  with  each  package,  and  a  copy 
of  the  letter  sent  by  mail. 

29.  The  package,  if  it  be  sent  by  express,  should  be  sealed 
up  in  stout  paper  and  addressed  to  the  Treasurer  of  the  U.  S. , 
Washington,  D.  C.  There  should  be  plainly  marked  on  the 
outside  the  owner's  name  and  address,  the  amount  and  kind  of 
currency  enclosed,  the  disposition  to  be  made  of  the  proceeds, 
and  the  statement  that  the  package  is  forwarded  under  the 
Government  contract,  if  such  be  the  case. 

30.  It  is  the  duty  of  postmasters  to  register  free  of  charge 
all  letters  on  which  the  postage  has  been  fully  prepaid,  ad- 
dressed to  the  Treasurer,  containing  currency  of  the  U.  S.  for 
redemption.  It  is  recommended  that  all  such  letters  be  regis- 
tered as  a  protection  against  loss. 

31.  Remittances  of  money  by  mail  should  be  addressed  to 
the  Treasurer  of  the  U.  S.,  Washington,  D.  C.  Such  remit- 
tances and  returns  therefor  by  mail  are  invariably  at  the  risk 
of  the  owners.  All  communications  to  the  Treasurer  in  regard 
to  packages  lost  in  the  mail  are  referred  for  investigation  to 
the  Chief  Post-Office  Inspector,  Post-Office  Department,  Wash- 
ington, D.  C,  to  whom  any  subsequent  inquiry  on  the  subject 
should  be  addressed. 

XI. — EXPRESS  CHARGES   PAID   BY   THE   GOVERNMENT. 

32.  Express  charges  are  paid  by  the  Government — 

I.  On  standard  silver  dollars  and  fractional  silver  coin  sent 
from  the  Mint,  the  Treasury,  or  the  sub-Treasuries,  in  sums  or 
multiples  of  $500. 


i65 

II.  On  National  bank  notes  sent  to  the  Treasurer  for  re- 
demption, in  sums  or  multiples  of  $1000. 

EXPRESS   CHARGES   NOT   PAID   BY  THE  GOVERNMENT. 

33.  On  lawful  money  of  the  U.  S.  sent  for  redemption  or  for 
credit  of  the  five  per  cent,  redemption  fund,  and  on  National 
bank  notes  sent  for  redemption  in  other  amounts  than  multi- 
ples of  $1000,  the  charges,  if  not  prepaid,  are  deducted  from 
the  proceeds  at  contract  rates. 

34.  On  fractional  silver  coin  and  minor  coin  sent  for  redemp- 
tion, the  charges  must  be  prepaid  by  the  sender. 

35.  On  U.  S.  notes  returned  for  U.  S.  notes  or  National  bank 
notes  redeemed,  the  charges  are  deducted  at  contract  rates. 

36.  On  gold  coin  sent  from  the  Mint  on  orders  from  the 
Treasurer  in  return  for  deposits  with  the  Assistant  Treasurer 
in  New  York,  the  charges  are  deducted  at  contract  rates. 

37.  On  transfers  of  funds  from  National  bank  depositaries, 
under  letters  of  instruction,  the  charges  must  be  paid  by  the 
depositaries. 

THE    GOVERNMENT    CONTRACT    WITH    THE    ADAMS    EXPRESS 

COMPANY. 

38.  The  Government  contract  extends  to  all  points  accessi- 
ble through  established  express  lines  reached  by  continuous 
railway  communication,  but  does  not  embrace  sea  or  river 
transportation  of  an)-  kind,  and  does  not  extend  westward  be- 
yond Omaha  and  Nebraska  City,  Nebraska,  and  Atchison  and 
Leavenworth,  Kansas. 

39.  The  contract  rates  for  the  transportation  of  U.  S.  notes 
to  the  Treasurer  for  redemption,  and  U.  S.  notes  sent  in  return, 
are  25  cents  per  $1000  to  or  from  points  within  the  territory 
of  the  Adams  Express  Company,  and  60  cents  per  $1000  to  or 
from  points  within  the  territory  of  any  other  express  company, 
except  points  in  Kansas  west  of  Atchison  and  Leavenworth, 
in  Nebraska  west  of  Omaha  and  Nebraska  City,  in  Arkansas 
and  Texas,  to  or  from  which  the  rate  is  85  cents  per  $1000. 

.When  the  remittance  does  not  exceed  $500,  the  rate  is  half  of 
that  for  $1000. 

40.  The  rates  for  the  transportation  of  National  bank  notes 
to  the  Treasurer  for  redemption  are  37^2   cents  per  $1000  to 


i66 

each  express  company  over  whose  lines  the  remittances  pass, 
and  for  U.  S.  notes  sent  in  return,  25  cents  per  $1000  to  points 
within  the  territory  of  the  Adams  Express  Company,  and  60 
cents  per  $1000  to  points  within  the  territory  of  any  other  ex- 
press company,  except  points  in  Kansas  west  of  Atchison  and 
Leavenworth,  in  Nebraska  west  of  Omaha  and  Nebraska  City, 
in  Arkansas  and  Texas,  for  which  the  rate  for  both  classes  of 
shipments  is  $1.50  per  $1000.  Sums  less  than  $1000  are  paid 
for  as  $1000. 

41.  The  contract  rate  for  the  transportation  of  gold  coin  is 
rVV  of  a  cent  per  mile  per  $1000,  with  a  minimum  rate  of  50 
cents  per  $1000  to  each  express  carrying,  when  the  distance 
at  the  prescribed  rate  does  not  equal  that  sum.  Parts  of  $1000, 
not  exceeding  $500,  are  charged  half  the  price  for  $1000,  with 
a  minimum  rate  of  25  cents  to  each  express  carrying. 

42.  The  contract  rate  for  the  transportation  of  silver  coin  is 
A°(j  of  a  cent  per  mile  per  $1000,  with  a  minimum  rate  of  $1 
per  $1000  to  each  express  carrying,  when  the  distance  at  the 
prescribed  rate  does  not  equal  that  sum.  Parts  of  $iooo,  not 
exceeding  $500,  are  charged  half  the  price  for  $1000,  with  a 
minimum  rate  of  50  cents  to  each  express  carrying. 

43.  The  Treasurer  has  no  control  over  rates  exacted  when 
the  charges  are  prepaid  or  when  remittances  come  from  points 
without  the  limits  of  the  contract. 

44.  No  charge  is  made  for  the  amount  of  express  charges 
enclosed  with  a  remittance  of  even  thousands  of  dollars,  when 
separately  noted  on  the  wrapper.  Packages  should  always  be 
marked  with  the  exact  amount  of  the  contents. 

XII. — GENERAL   INFORMATION. 

45.  Assistant  Treasurers  elsewhere  than  in  New  York  are 
not  authorized  to  receive  drafts  of  banks  and  bankers  under 
this  circular. 

46.  The  Act  of  June  30th,  1876,  (19  Stats. ,  64,)  requires  "that 
all  United  States  officers  charged  with  the  receipt  or  disburse- 
ment of  public  moneys,  and  all  officers  of  National  banks,  shall 
stamp  or  write  in  plain  letters  the  word  'counterfeit,'  'altered,' 
or  '  worthless  '  upon  all  fraudulent  notes  issued  in  the  form  of, 
and  intended  to  circulate  as  money,  which  shall  be  presented 


i67 

at  their  places  of  business;  and  if  such  officers  shall  wrongfully 
stamp  any  genuine  note  of  the  United  States,  or  of  the  Na- 
tional banks,  they  shall,  upon  presentation,  redeem  such  notes 
at  the  face  value  thereof. ' ' 

47.  When  the  total  amount  of  dues  in  any  one  payment  to 
the  Government  cannot  be  paid  entirely  in  lawful  money  of 
denominations  of  one  dollar  or  greater,  because  involving  a 
fractional  part  of  a  dollar,  such  fractional  part  may  be  paid  in 
silver  coins  of  denominations  of  less  than  one  dollar;  but  when 
the  total  amount  of  such  dues  does  not  exceed  ten  dollars,  such 
total  amount  may  be  paid  in  the  silver  coins  of  denominations 
of  less  than  one  dollar. 

48.  In  case  of  the  loss  or  destruction  of  one  of  the  Treasurer' s 
checks,  and  upon  application  for  a  duplicate,  payment  of  the 
original  check  is  stopped,  and  the  applicant  is  furnished  with 
a  form  of  bond  of  indemnity,  upon  return  of  which,  properly 
executed,  a  duplicate  is  issued. 

Compliance  with  the  foregoing  regulations  is  enjoined  on  all 
officers  of  the  Department,  and  observance  of  them  will  be  ex- 
pected of  all  making  remittances  to  this  office. 

REDEMPTION  OF  NATIONAL  BANK  NOTES  AT  THE 
NATIONAL  BANK  REDEMPTION  AGENCY. 


Disposition  of  National  Bank  Notes. 
I.  Packages  of  National  bank  notes  received  for  redemption 
are  charged  to,  and  receipted  for,  by  the  counters,  with  the  seals 
unbroken ;  and  the  counters  are  required  to  count,  return,  and 
obtain  a  receipt  for  the  contents  of  each  package  before  re- 
ceiving another.  An  inventory  of  the  contents  according  to 
the  amounts  marked  on  the  straps  is  made  immediately  on 
opening  the  package,  and  the  contents  of  each  strap  are  sepa- 
rately proved.  Discrepancies  are  noted  on  the  proper  strap, 
which  is  returned  to  the  owner.  "Shorts"  are  at  once  re- 
ported and  verified  by  the  teller  in  charge.  The  packages  are 
charged  to  the  counters  by  the  amounts  on  the  wrappers,  and 
any  discrepancy  between  these  amounts  and  the  contents  is 
reported  as  an  "  over  "  or  a  "  short ' '  by  inventory. 


1 68 

2.  The  redeemed  notes  of  the  several  National  banks  are 
assorted,  prepared  for  delivery,  and  charged  to  their  five  per 
cent,  accounts,  and  advices  of  redemption  are  forwarded  to 
them,  in  regular  rotation,  following  an  alphabetical  arrange- 
ment; and  no  departure  from  this  practice  can  be  made  for  the 
accommodation  of  any  bank. 

3.  If  the  amount  due  does  not  exceed  the  five  per  cent,  de- 
posit of  the  bank,  the  notes  fit  for  circulation  are  forwarded  to 
it  by  express,  and  the  notes  unfit  for  circulation  are  delivered 
to  the  Comptroller  of  the  Currency,  on  the  same  day  that  the 
advice  of  redemption  is  issued.  If  the  bank's  five  per  cent, 
account  is  overdrawn  by  the  redemption,  a  sufficient  amount 
of  the  notes  to  cover  the  overdraft  is  held  until  it  is  made  good. 

4.  The  law  requires  the  return  of  the  redeemed  notes  fit  for 
circulation  to  the  respective  associations  by  which  they  were 
issued,  and  the  delivery  of  those  unfit  for  circulation  to  the 
Comptroller  of  the  Currency  for  destruction,  and  no  other  dis- 
position can  be  made  of  them. 

5.  All  of  the  redeemed  notes  of  banks  which  have  made  a 
deposit  of  United  States  notes  for  the  retirement  of  all  or  a 
portion  of  their  circulation  are  charged  to  that  deposit  until  it 
is  exhausted. 

6.  Upon  a  change  in  the  title  of  a  National  bank  all  of  the 
redeemed  notes  issued  under  the  former  title  are  destroyed, 
and  the  same  course  is  pursued  with  notes  of  the  old  issue  of 
banks  whose  charters  have  been  extended. 

Five  Per  Cent.  Redemption  Fund. 

7.  Every  newly-organized  National  bank  is  required,  im- 
mediately upon  the  receipt  of  its  circulation  from  the  Comp- 
troller of  the  Currency,  to  deposit  in  the  Treasury  of  the  United 
States  a  sum  equal  to  five  per  centum  thereof,  in  lawful  money 
of  the  United  States,  "  to  be  held  and  used  for  the  redemption 
of  such  circulation." 

8.  A  similar  deposit  is  required  on  all  additional  circulation 
issued  to  National  banks. 

9.  In  estimating  the  circulation  upon  which  the  deposit  is 
required,  the  bank  must  include  all  notes  of  its  issue  in  its 
possession,  as  well  as  those  in  actual  circulation. 


169 

io.  Upon  receipt  of  the  advices  of  redemption,  National 
banks  are  required  to  remit  forthwith  an  amount  sufficient  to 
make  good  their  five  per  cent,  deposits,  without  awaiting  the 
receipt  of  the  notes  fit  for  circulation,  or  the  certificate  of  the 
destruction  of  the  notes  unfit  for  circulation. 

11.  Banks  which  have  made  deposits  of  lawful  money  of  the 
United  States  for  the  retirement  of  a  portion  of  their  circula- 
tion, and  those  whose  notes  have  been  destroyed  without  re- 
issue, are  required  to  maintain  the  five  per  cent,  deposit  only 
on  the  remainder.  The  excess  over  the  required  amount  is 
surrendered  immediately  on  receipt  from  the  Comptroller  of 
the  Currency  of  advice  of  the  amount  retired.  Only  reductions 
of  circulation  which  are  accompanied  by  a  release  of  bonds  are 
regarded. 

12.  Banks  which  have  resolved  to  go  into  liquidation  must 
maintain  the  full  five  per  cent,  deposit,  until  lawful  money  of 
the  United  States  is  deposited  for  the  retirement  of  their  cir- 
culation ;  but  all  of  their  notes  redeemed,  whether  fit  or  unfit 
for  circulation,  are  destroyed.  When  the  deposit  is  made,  the 
excess  of  the  five  per  cent,  deposit  over  the  amount  required 
to  cover  the  expenses  of  redemption  is  surrendered. 

13.  Banks  may  keep  with  the  Treasurer  any  amount  they 
choose  in  excess  of  the  required  five  per  cent.,  but  they  are  not 
permitted  to  count  such  excess  as  a  part  of  their  lawful  money 
reserve.  It  should  be  entered  on  their  reports  of  their  condi- 
tion, under  item  23 :  "  Due  from  United  States  Treasurer  (other 
than  five  per  cent,  redemption  fund.)" 

14.  Remittances  for  credit  of  the  five  per  cent,  redemption 
fund  may  be  made  in  any  of  the  following  ways: 

I.  By  a  check  drawn  on  New  York,  payable  to  the  order  of 
the  Assistant  Treasurer  U.  S.  in  New  York,  and  collectible 
through  the  clearing-house,  forwarded  directly  to  that  officer, 
with  instructions  to  deposit  the  amount  on  account  of  the  five 
per  cent,  fund,  and  to  forward  the  certificate  of  deposit  therefor 
to  the  Treasurer  U.  S. 

II.  By  a  deposit  of  lawful  money  of  the  United  States  with 
the  Assistant  Treasurer  U.  S.  in  Baltimore,  Boston,  Chicago, 
Cincinnati,  New  Orleans,  New  York,  Philadelphia,  Saint  Louis, 
or  San  Francisco,  on  account  of  the  five  per  cent.  fund.     Banks 


170 

not  situated  in  one  of  the  above-named  cities  should  make  the 
deposit  through  their  correspondents.  The  certificate  of  de- 
posit must  be  forwarded  directly  to  the  Treasurer  U.  S.  by  the 
bank  making  the  deposit,  as  credit  cannot  be  given  until  it  is 
received. 

III.  By  a  remittance  of  lawful  money  of  the  United  States, 
addressed  to  the  Treasurer  U.  S. ,  Washington,  D.  C. ,  marked 
with  the  amount  and  nature  of  the  contents,  and  the  fact  that 
it  is  "for  credit  of  the  five  per  cent,  fund."  The  express 
charges,  if  not  prepaid,  will  be  deducted  from  the  proceeds  of 
the  remittance  at  Government  contract  rates. 

15.  National  bank  depositaries  are  not  authorized  to  receive 
deposits  for  credit  of  the  five  per  cent.  fund. 

16.  Assistant  Treasurers  are  not  authorized  to  receive  remit- 
tances by  express  on  account  of  the  five  per  cent,  fund;  and 
only  the  Assistant  Treasurer  in  New  York  is  authorized  to  re- 
ceive checks  on  that  account. 

17.  It  is  not  necessary  to  advise  the  Treasurer  of  remittances 
on  account  of  the  five  per  cent,  fund,  unless  they  are  made 
directly  to  him. 

18.  National  banks  should  make  only  such  deposits  on  ac- 
count of  the  five  per  cent,  fund  as  they  desire  to  have  applied 
in  the  redemption  of  their  notes,  or  in  payment  of  the  expenses 
of  redemption. 

19.  Acknowledgments  of  remittances  made  by  one  bank  for 
credit  of  the  five  per  cent,  account  of  another  are  sent  only  to 
the  bank  whose  account  is  credited. 

20.  National  banks  should  charge  the  original  five  per  cent, 
deposit,  and  all  subsequent  remittances  for  credit  of  the  five 
per  cent,  account,  to  an  account  designated  as  the  ' '  five  per 
cent,  redemption  fund." 

21.  On  receipt  of  the  advice  of  redemption  "circulation 
outstanding  "  should  be  charged  with  the  amount  of  both  fit 
and  unfit  notes  reported  as  redeemed,  and  the  redemption  fund 
credited.  When  the  redemption  is  reimbursed  the  redemption 
fund  should  be  charged.  When  the  notes  fit  for  circulation 
are  received  by  the  bank,  the  circulation  account  should  be 
credited;  and  the  same  course  should  be  pursued  when  the 


I7I 

incomplete  currency,   received   from  the  Comptroller  of  the 
Currency  in  place  of  the  unfit  notes,  is  made  ready  for  issue. 

22.  Remittances  for  redemption  and  returns  should  not  be 
charged  to  the  five  per  cent,  redemption  fund. 

Assessment  for  Expenses. 

23.  The  expenses  incurred  for  "the  charges  for  transporta- 
tion and  the  costs  for  assorting  ' '  the  redeemed  notes  of  Na- 
tional banks  are  assessed  upon  the  several  banks,  including 
those  which  have  made  deposits  of  lawful  money  for  the  re- 
duction of  their  circulation  in  proportion  to  the  amount  of 
their  circulation  redeemed,  and  are  charged  to  them  in  their 
five  per  cent,  accounts.  The  assessment  is  made  by  fiscal 
years,  and  is  levied  as  soon  after  the  end  of  each  fiscal  year 
(June  30th)  as  the  accounts  can  be  settled  and  the  computations 
made. 

24.  Under  Section  8  of  the  Act  of  July  12th,  1882,  National 
banks  making  deposits  of  lawful  money  for  the  retirement  in 
full  of  their  circulation  are  assessed  at  the  time  of  their  deposit 
for  the  cost  of  transporting  and  redeeming  their  notes  then 
outstanding  a  sum  equal  to  the  average  cost  of  the  redemption 
of  National  bank  notes  during  the  preceding  year.  Any  notes 
which  may  have  been  redeemed  for  their  five  per  cent,  deposits 
during  the  year  then  current  are  included  in  the  assessment. 

25.  Remittance  should  be  made  for  the  amount  of  the  assess- 
ment immediately  on  receipt  of  the  notice  thereof,  in  the  same 
manner  as  for  notes  redeemed,  unless  there  is  a  sufficient  excess 
to  the  credit  of  the  bank  in  the  five  per  cent,  fund  to  cover  it. 

Incomplete  Currency. 

26.  The  issue  of  new  circulating  notes  to  National  banks  is 
under  the  control  of  the  Comptroller  of  the  Currency,  and  all 
inquiries  and  requests  in  regard  thereto  should  be  addressed 
to  him. 

27.  New  currency  is  ordered  to  be  printed  only  on  requisi- 
tions from  the  banks,  specifying  the  amounts  and  denomina- 
tions desired.  Banks  should  keep  an  account  of  the  amount 
of  their  incomplete  currency  in  the  Comptroller's  office,  and 
should  make  requisitions  on  him  for  the  printing  of  additional 
supplies  a  sufficient  time  in  advance  of  the  exhaustion  of  those 


172 

previously  ordered  to  cover  the  time  required  for  the  prepara- 
tion of  the  new  notes  by  the  engravers. 

28.  Banks  are  charged  with  the  full  amount  of  their  notes 
unfit  for  circulation  delivered  to  the  Comptroller,  whether  the 
exact  amount  is  reissued  by  him  or  not.  Sometimes  the  exact 
amount  is  not  sent,  because  it  cannot  be  made  up  of  full  sheets 
of  notes.  The  amount  due  should  appear  on  the  bank's  books 
as  a  deficit  in  its  circulation  account,  and  not  as  an  excess  in 
its  five  per  cent,  account. 

Final  Count  and  Destruction  of  Notes. 

29.  The  currency  unfit  for  circulation,  after  being  assorted 
and  counted  in  the  National  Bank  Redemption  Agency,  is  can- 
celled by  cutting  off  the  signatures  of  the  president  and  cashier. 
It  is  then  done  up  in  sealed  packages  and  delivered  daily  to 
the  Comptroller  of  the  Currency,  who  has  it  examined,  count- 
ed, and  schedules  made  for  the  banks  of  what  is  to  be  destroyed 
each  day.  It  is  then  delivered  to  clerks  from  the  office  of  the 
Secretary  of  the  Treasury  occupying  a  room  for  the  time  being 
in  the  Comptroller's  office,  to  be  examined  and  counted.  After 
this  count  the  notes  are  further  cancelled  by  punching,  and 
then  delivered  to  the  agent  of  the  bank  in  the  same  room,  who 
examines  and  counts  them  and  verifies  the  amount.  The  pack- 
age is  then  checked  off  from  the  schedules  in  the  presence  of 
the  four  witnesses,  deposited  in  locked  boxes  and,  accompanied 
by  the  witnesses,  taken  to  the  macerator  and  is  ground  into 
pulp. 


PURCHASE,  EXCHANGE,  AND  REDEMPTION  OF  THE  MINOR 
COINS  OF  THE  UNITED  STATES. 


The  minor  coins  of  the  United  States  are  established  by 
Section  3515,  Revised  Statutes,  as  follows:  A  five-cent  piece, 
a  three-cent  piece,  and  a  one-cent  piece. 

By  Section  3529  minor  coins  are  redeemed  in  lawful  money, 
and  are  exchangeable  at  par  at  the  Philadelphia  mint  for  any 
other  coins  of  copper,  bronze,  or  copper-nickel  of  the  United 
States. 


i?3 

Purchase  of  Minor  Coins. 

Persons  desiring  to  purchase  the  minor  coins  issued  under 
Section  3515,  are  informed  that  they  will  be  issued  to  them  in 
exchange,  at  par,  for  lawful  money  of  the  United  States,  in 
sums  of  twenty  dollars  or  multiples  thereof. 

Applications  for  these  coins  must  be  made,  in  all  cases,  to 
the  Superintendent  of  the  Mint  of  the  United  States  at  Phila- 
delphia, Pa.,  accompanied  by  the  necessary  funds;  on  the  re- 
ceipt of  which,  or  as  soon  thereafter  as  practicable,  such  minor 
coins,  to  the  amount  of  the  remittance,  will  be  forwarded,  at 
the  cost  of  the  mint,  to  any  of  the  principal  towns  or  cities  of 
the  United  States  as  desired. 

Remittances  for  this  purpose  may  also  be  made  in  post-office 
money  orders  or  sight  drafts,  payable  in  Philadelphia  or  New 
York,  to  the  order  of  said  superintendent. 

Persons  making  application  for  these  minor  coins  will  state 
particularly  the  denomination  required — whether  one  or  five 
cent  pieces — and  will  write  plainly  the  address  to  which  the 
coins  are  to  be  forwarded. 

The  Treasurer  or  any  Assistant  Treasurer  of  the  United 
States  is  also  authorized  to  pay  out  for  legal  tender  notes  any 
minor  coins  held  by  him  and  not  needed  for  the  current  busi- 
ness of  his  office. 

Exchange  of  Minor  Coins. 

The  minor  coins  of  copper,  bronze,  or  copper-nickel,  referred 
to  in  Section  3529,  are  as  follows,  viz:  Large  copper  cents 
issued  prior  to  1857;  nickel-copper  cents  issued  from  1857  to 
1864;  bronze  cents  issued  from  1864  to  T873)  bronze  two-cent 
pieces;  copper-nickel  three-cent  pieces;  and  copper-nickel  five- 
cent  pieces. 

Persons  holding  these  coins  and  desiring  their  exchange  for 
the  minor  coins  authorized  to  be  issued  by  Section  3515,  above 
published,  may  present  or  forward  them  for  this  purpose  to 
the  Superintendent  of  the  Mint  of  the  United  States  at  Phila- 
delphia, Pa.,  in  packages  containing  twenty  dollars  or  multi- 
ples thereof,  properly  assorted  and  separated  by  the  denomina- 
tions and  issues  above  specified. 

Each  package  must  be  accompanied  by  a  list  setting  forth 


J  74 

the  aggregate  amount  of  coin  which  the  package  contains,  and 
the  amount  of  each  denomination  and  issue,  together  with  the 
name  and  post-office  address  of  the  party  sending  it,  who  will 
also  advise  the  Superintendent  of  the  Mint  of  the  amount  and 
denomination  of  minor  coins  desired  in  return,  and  designating 
the  city  or  town  most  convenient  to  him  to  which  he  desires 
such  coins  to  be  sent. 

Redemption  of  Minor  Coins. 

Persons  holding  coins  of  copper,  bronze,  or  copper-nickel 
authorized  by  law,  and  desiring  their  redemption  in  lawful 
money,  may  forward  or  present  them  for  this  purpose  to  any 
of  the  offices  of  redemption  hereinafter  specified,  putting  the 
coins  in  packages  of  twenty  dollars  each  or  multiples  thereof, 
assorted  and  separated  by  denominations  and  issues,  as  above 
directed  in  cases  of  forwarding  for  exchange,  and,  if  forwarded, 
advising  the  officer  to  whom  sent  of  the  amount  and  kind  of 
coin  shipped,  and  the  place  (New  York,  Philadelphia,  Boston, 
New  Orleans,  or  San  Francisco)  at  which  the  transfer  check  to 
be  drawn  by  the  Treasurer  of  the  United  States  shall  be  made 
payable. 

Upon  the  receipt  of  the  minor  coins  thus  forwarded  or  pre- 
sented fer  redemption,  the  officer  receiving  them  will  carefully 
count  and  examine  the  same,  and  thereupon,  unless  payment 
therefor  can  be  made  over  the  counter,  will  issue  a  certificate, 
to  be  at  once  transmitted  by  him  to  the  Treasurer  of  the  United 
States  at  Washington,  D.  C. ;  which  certificate  shall  state  the 
amount  of  coin  received,  the  name  and  address  of  the  person, 
company,  corporation,  or  firm  making  the  remittance,  and  the 
place  at  which  the  transfer  check  shall  be  made  payable. 

The  Treasurer  of  the  United  States  will,  upon  the  receipt  of 
this  certificate,  transmit  to  the  owner  of  the  coin  a  transfer 
check  payable  to  his  order,  in  United  States  currency,  for  the 
amount  specified  in  the  certificate,  the  check  to  be  drawn  upon 
the  Assistant  Treasurer  of  the  United  States  in  New  York, 
Philadelphia,  Boston,  New  Orleans,  or  San  Francisco,  at  the 
option  of  the  party  forwarding  the  coin. 

A  detailed  register  of  purchases  and  exchanges  is  hereby  di- 


175 

rected  to  be  kept  in  the  mint  at  Philadelphia,  and  a  register 
of  redemptions  in  each  office  of  redemption. 

The  expenses  of  transportation  of  the  old  coins  thus  for- 
warded for  exchange  or  redemption  must  be  paid  by  the  parties 
forwarding  them.  The  coin  in  return  will  be  forwarded  at 
the  expense  of  the  United  States. 

Minor  coins  so  mutilated  that  they  cannot  be  identified,  or 
materially  reduced  in  value  by  clipping  or  otherwise,  will  not 
be  exchanged  or  redeemed. 

Silver  coins  will  not,  in  any  case,  be  received  for  redemption 
or  exchange  under  the  provisions  of  this  circular. 

All  instructions  heretofore  issued  by  this  Department  in  re- 
lation to  the  purchase,  exchange,  and  redemption  of  minor 
coins,  in  conflict  with  these  instructions,  are  hereby  abrogated. 

The  offices  of  redemption  herein  referred  to  are  as  follows: 

The  Treasurer  of  the  United  States,  Washington,  D.  C. 

The  Assistant  Treasurers  of  the  United  States  at  Boston, 
Mass. ;  New  York  City,  N.  Y. ;  Philadelphia,  Pa. ;  St.  Louis, 
Mo.;  New  Orleans,  La.;  Cincinnati,  Ohio;  Chicago,  111.;  San 
Francisco,  Cal. ;  Baltimore,  Md. ;  and  United  States  Deposit- 
ary, Tucson,  Arizona. 


PURCHASE   OF   MUTILATED   SILVER   COINS. 


The  superintendents  of  the  United  States  mints  at  Philadel- 
phia, San  Francisco,  Carson,  and  New  Orleans  have  been  au- 
thorized to  purchase  mutilated  and  uncurrent  United  States 
silver  coin  of  standard  fineness  at  the  rate  of  one  dollar  per 
ounce  troy-weight,  when  presented  in  sums  of  three  dollars 
and  upward. 

Coins  can  be  forwarded  to  those  mints  by  registered  mail  or 
by  express,  (charges  prepaid,)  and  the  value  will  be  returned, 
at  the  seller's  risk  and  expense,  by  express,  registered  mail, 
check,  or  draft. 

Persons  sending  full  weight  United  States  subsidiary  silver 
coins  would  receive,  at  the  rate  authorized,  eighty  cents  per 


176 

dollar  of  their  face  value,  but  for  mutilated  coins  a  less  amount, 
proportioned  to  their  deficiency  in  legal  weight. 

At  the  rates  paid,  mutilated  silver  coins  will  be  worth  at  the 
mints — 

Per  ounce,  troy $1  00 

"       avoirdupois about         91 

u   dollar,  face  value,  (approximately) 70  to  76 


INDORSEMENT  AND  PAYMENT  OF  TREASURY  DRAFTS 
AND  POST-OFFICE   DEPARTMENT  WARRANTS. 


Treasury  drafts  and  Post-office  warrants  must  not  be  paid  until 
the  indorsements  conform  to  the  following  regulations: 

1.  The  name  of  the  payee,  as  indorsed,  must  correspond  in 
spelling  with  that  on  the  face  of  the  draft;  no  guarantee  of  an 
indorsement,  imperfect  in  itself,  can  be  accepted.  If  the  name 
of  a  payee,  as  written  on  the  face  of  a  draft,  is  spelled  incor- 
rectly, the  draft  should  be  returned  to  the  Treasurer  U.  S.  for 
correction. 

2.  Indorsements  by  mark  (X)  must  be  witnessed  by  two  per- 
sons who  can  write,  giving  their  places  of  residence. 

3.  Indorsements  by  executors,  administrators,  guardians,  or 
other  fiduciaries  must  be  accompanied  by  certified  copies, 
under  seal,  of  letters  testamentary,  letters  of  administration, 
of  guardianship,  or  other  evidence  of  fiduciary  character,  as 
the  case  may  be. 

4.  Payees  and  endorsees  must  indorse  by  their  own  hands; 
officials,  officially  with  full  title;  firms,  the  usual  firm-signature 
by  a  member  of  the  firm,  not  by  a  clerk  or  other  person  for 
the  firm. 

5.  Every  indorsement  must  be  by  the  proper  written  (not 
printed)  signature  of  the  person  whose  indorsement  is  required. 

6.  Powers  of  attorney  for  the  indorsement  of  drafts  in  pay- 
ment of  claims  must  state  the  number,  date,  and  amount  of 
draft,  and  number  and  kind  of  warrant,  and  be  dated  subse- 
quently to  the  date  of  the  drafts;  must  be  witnessed  by  two 
persons,  and  must  be  acknowledged  by  the  constituent  before 


i77 

the  Treasurer  of  the  United  States  or  an  Assistant  Treasurer, 
a  judge  or  clerk  of  a  District  Court  of  the  United  States,  a 
collector  of  customs,  a  notary  public  under  his  seal,  or  a  justice 
of  the  peace  in  those  States  only  in  which  such  justice  has 
authority  to  take  acknowledgments  of  deeds,  or  commissioner 
of  deeds;  if  before  either  of  the  two  latter,  the  certificate  and 
seal  of  the  county  clerk  as  to  the  official  character  and  signa- 
ture of  the  justice  or  commissioner  is  required.  If  executed 
in  a  foreign  country,  the  acknowledgment  must  be  made  be- 
fore a  notary  public,  with  his  seal  attached,  or  a  U.  S.  Consul 
or  Minister.  The  officer  taking  the  acknowledgment  must 
certify  that  the  letter  of  attorney  was  read  and  fully  explained 
to  the  constituent  at  the  time  of  acknowledgment,  and  that  said 
constituent  is  personally  well  known  to  him  to  be  the  identical 
person  named  in  and  who  subscribed  his  name  to  said  power 
of  attorney.     (See  Revised  Statutes,  Sees.  1778  and  3477.) 

7.  Evidence  of  authority  to  indorse  for  incorporated  or 
unincorporated  companies  must  accompany  drafts  drawn  or 
indorsed  to  the  order  of  such  companies  or  associations.  Such 
evidence  should  be  in  the  form  of  an  extract  from  the  by-laws 
or  records  of  the  company  or  association,  showing  the  au- 
thority of  the  officer  to  indorse  and  receive  and  receipt  for 
moneys  for  the  company,  and  giving  his  name  and  the  date  of 
his  election  or  appointment,  which  extract  must  be  verified 
by  a  certificate  under  seal  signed  by  the  president  and  secretary, 
or  by  one  of  these  officers  and  not  less  than  two  of  the  directors; 
which  certificate  must  state  that  such  authority  remains  un- 
revoked and  unchanged.  If  the  company  have  no  seal,  the 
extract  should  be  certified  as  correct  by  a  notary  public  or 
other  competent  officer  under  his  seal.  When  a  resolution  is 
adopted  at  a  special  meeting  of  directors,  it  must  be  shown 
that  all  had  notice  of  the  time  and  place  of  such  meeting,  and 
that  a  quorum  assented  to  the  resolution. 

8.  In  cases  where  an  individual  or  a  copartnership  is  doing 
business  under  a  company  title,  the  affidavit  of  the  owner  or 
of  the  members  of  the  copartnership  will  be  required,  showing 
the  fact  of  ownership  and  naming  the  person  who  is  authorized 
to  indorse  and  receive  and  receipt  for  moneys  for  the  owners. 

12 


i;8 

9.  The  indorsement  of  all  the  joint  holders  or  co- trustees, 
executors,  administrators,  guardians,  or  other  fiduciaries  will 
will  be  required  on  drafts,  and  in  the  execution  of  a  power  to 
a  third  party  to  collect,  all  must  join.  In  case  of  death  of 
either,  the  survivors  will  be  recognized  as  having  full  authority, 
upon  due  proof  of  such  death  and  survivorship. 


REGULATIONS  RESPECTING   THE   SEMI-ANNUAL   RETURNS 
AND  PAYMENT  OF  DUTIES  BY  NATIONAL  BANKS. 


1.  By  Section  5215,  Revised  Statutes,  it  is  made  the  duty  of 
the  Treasurer  of  the  United  States  to  prescribe  the  form  for 
making  return  by  each  National  bank  of  the  average  amount 
of  its  notes  in  circulation  for  each  half  year. 

2.  This  Return,  with  each  blank  filled  with  the  proper 
amount  as  indicated,  and  subscribed  and  sworn  to  by  the  presi- 
dent or  cashier  of  the  bank  before  an  officer  qualified  to  admin- 
ister oaths,  must  be  sent  to  the  Treasurer  of  the  United  States 
within  ten  days  from  the  first  days  of  January  and  July,  respect- 
ively, in  each  year,  under  a  penalty  of  two  hundred  dollars, 
and  payment  must  be  made  within  the  months  of  January 
and  July. 

3.  Payment  may  be  made  by  deposit  of  the  amount  of  duty 
to  the  credit  of  the  Treasurer  of  the  United  States,  with  him, 
or  with  any  Assistant  Treasurer  or  National  Bank  Depositary. 
Triplicate  certificates  should  be  issued  therefor,  the  ' '  original ' ' 
of  which  must  be  forwarded  to  the  Secretary  of  the  Treasury, 
the  ' '  duplicate  ' '  to  the  Treasurer,  and  the  ' '  triplicate  ' '  held 
by  the  bank  making  the  deposit  as  its  voucher  therefor.  No 
other  receipt  will  be  issued.  The  certificate  must  state  that 
the  deposit  is  on  account  of  semi-annual  duty. 

4.  If  there  is  no  depository  convenient,  payment  may  be 
made  by  draft  on  New  York,  (collectible  through  the  Clearing 
House,)  to  the  order  of  the  Treasurer,  or  by  remittance  to  him 
in  lawful  money  of  the  United  States  or  notes  of  National 
banks,  for  which  the  Treasurer  will  issue  his  certificate  of  de- 
posit, and  send  the  triplicate  to  the  bank. 


i79 

5.  The  duty  on  circulating  notes  is  one-half  of  one  per  centum 
on  the  average  amount  outstanding  for  the  six  months. 

6.  Liability  begins  on  the  first  days  of  January  and  July  in 
each  year,  unless  a  bank  had  at  that  time  no  circulation  out- 
standing, in  which  case  it  begins  with  the  date  of  the  first  issue 
of  notes,  and  terminates  on  the  30th  day  of  June  or  the  31st 
day  of  December,  (as  the  case  may  be,)  date  of  commencement 
and  termination  both  included. 

7.  Banks  that  have  heretofore  made  returns  will  report  for 
the  full  semi-annual  term  of  181,  182,  or  184  days,  as  the  case 
may  be  ;  and  banks  that  have  not  heretofore  made  returns  will 
report  their  circulating  notes  from  and  including  the  date  of 
their  first  issue. 

8.  To  ascertain  the  average  amount,  add  together  the  dai Im- 
balances of  the  notes  in  circulation  from  the  proper  date  of  the 
commencement  of  the  liability  to  duty  (including  for  each 
Sunday  and  holiday  the  balance  of  the  first  preceding  business 
day)  to  and  including  the  30th  day  of  June  or  the  31st  day  of 
December,  as  the  case  may  be.  The  aggregate  of  daily  balances 
for  the  first  six  months  of  any  year  will  be  divided  by  181 — the 
number  of  days  from  January  1st  to  June  30th,  except  in  leap 
year,  when  the  sum  will  be  divided  by  182.  The  aggregate 
of  daily  balances  for  the  last  six  months  of  any  year  will  be 
divided  by  184 — the  number  of  days  from  July  1st  to  Decem- 
ber 31st. 

9.  Banks  not  making  daily  statements,  and  obtaining  their 
averages  from  weekly  statements,  should  add  together  the 
weekly  balances,  including  for  each  day  in  any  fractional  part 
of  a  week  one-seventh  of  the  weekly  balance  next  preceding 
such  fractional  part.  The  aggregate  of  balances  for  the  first 
six  months  of  any  year  will  be  divided  by  the  number  of  weeks 
from  January  1st  to  June  30th,  (25?  or  26,  as  the  case  may  be.) 
The  aggregate  of  balances  for  the  last  six  months  will  be  di- 
vided by  26?  — the  number  of  weeks  from  July  1st  to  Decem- 
ber 31st. 

10.  Banks  having  circulation  subject  to  duty  for  a  period 
less  than  a  half  year,  which  make  their  estimates  from  daily 
balances,  will  divide  the  aggregate  of  the  balances  of  the  item 
for  the  time  for  which  it  is  liable  to  duty  by  the  number  of 


i8o 

days  in  the  half  year;  and  banks  which  make  their  estimates 
from  weekly  balances,  by  the  number  of  weeks  and  the  frac- 
tions thereof  in  the  half  year.  The  quotient  thus  found  will 
be  the  average  amount  subject  to  duty  for  each  six  months, 
respectively,  and  should  be  entered  in  the  Return,  and  duty 
computed  thereon  at  the  full  semi-annual  rate. 

n.  A  bank  which  has  gone  into  liquidation,  in  making  its 
final  return  must  estimate  duty  upon  circulation  to  the  time 
of  making  the  deposit  of  lawful  money  with  the  Treasurer  U. 
S.  to  redeem  the  same.  The  item  should  be  averaged  for  the 
full  six  months,  according  to  the  foregoing  rule,  and  the  duty 
calculated  at  the  prescribed  rate.  The  amount  thus  deter- 
mined is  the  correct  proportion  for  the  time  for  which  the 
item  is  liable. 


I«I 


REGULATIONS    OF    THE    TREASURY    DEPARTMENT    IN    RELATION    TO 
UNITED    STATES    BONDS. 


Bonds  of  the  United  States. 

The  original  issues  of  bonds  of  the  United  States  under  the 

several  authorizing  Acts  of  Congress  are  divided  into  Coupon 

and  Registered  Bonds.     Of  these  issues  the  following  are  the 

Bonds  Outstanding  and  Bearing  Interest  March  15th,  1886. 


Title  of  loan  and  date  of  authorizing 
act. 


Currency  6's  Pacific  Railroad  ; 
July  I,  1862,  and  July  2,  1864 — 


$2,}62,CCO 

640,000 
1,600,000  ' 


Registered. 


1,600,000  \ 

1,440,000  > 

640,000  J 


Denominations.  ime're'sr         When  redeemable  or  payable. 


iooo;   5000;    10,000..   6  p-r  ct. 


Payable  thirty  years  after  is- 
sue. (Dates  of  issue,  1865  to. 
1869.) 


January  16,  189;. 
November  I,  1895. 


January  I,  1S96. 

4,320,000  February  I,  1896. 

9,712,000  ;  ' '  January  I,  1897. 

29,904,952  J January  I,  1898. 

14,004,560  ' '  January  1,  1899. 


$64,625,512 

Fundbd  Loan  of  1891  : 
July  14,  1870,  and  Jan.  20,  1S71 — 

Coupon 50,020,750  I  50;  100 ;  500;  1000.. 

Registered 199,979,250     50;ico;500;  1000; 

5000  ;  IO,O0O  ; 

250,000,000  20,000;   50,000. 


Consols  of  1907 : 
July   14,  1870,  and  Jan.  20,  1871- 

Coupon 129,915,300      505100;  500;  IOOO... 

Registered 607,834,700      50;  100;  500;  IOOO; 

5000  ;  10,000 ; 


737,750,000 

Funded  Loan  of  1882: 
July  12,  1882— 

Registered $174,092,350 


20,000;  50,000. 


50;  lOO;  500 ;  IOOO; 
I0,000. 


4^  per  ct.. 


4  per  ct. 


3  per  ct. 


Redeemable  after  September  I, 
1891. 


Redeemable  after  July  I,  1907. 


Redeemable  at  the  pleasure  of 
the  Government. 


The  following  are  the 

Bonds  which  have  Matured  and  Ceased  to  Bear  Interest. 


Loan  of  1858: 

5  per  ct 

Redeemable  after  fifteen  yean 
from  January  I,  1859. 

Fives  of  i860: 

5000. 

IOOO;   5000. 

from  January  I,  1861. 

Payable    after     December    ]I, 
1880. 

Sixes  of  1880 : 

IOOO;  5000 ;   10,000. 

g      

Oregon  War  Loan: 

Redeemable  twenty  years  from 
July  1,  1861. 

182 


Bonds  which  have  Matured  and  Ceased  to  Bear  Interest. — (Continued.) 


Title  of  loan  and  date  of  authorizing 
act. 

Denominations. 

Rate  of 
interest. 

When  redeemable  or  payable 

Sixes  of  1881  : 

July  17  and  August  5,  1861 — 

50;  100;  500;  1000 ; 

SO  ;  IOO  ;  500  ;  IOOO  ; 

5000;   10,000. 

50;  IOO;  500;   IOOO; 

;o;  IOO;  500 ;  IOOO; 

5000  ;    IO,COO. 

50;  IOO  ;  500  ;  IOOO.. 

50;  IOO;  SOO,  IOOO  ; 

5000 ;  10,000. 

IOO;       500;       IOOO; 

COOO. 

50  ;  IOO;  500;  IOOO.. 

CO;  IOO;  500  ;  IOOO; 

5000  ;  I0,OO0. 

50  ;  IOO  ;  500  ;   IOOO... 

JO;  IOO;  500;  IOOO; 

5000  ;  I0,OO0. 

50  ;  IOO  ;  JOO  ;   IOOO... 

50  ;  IOO;  500  ;  IOOO; 

5000;  I0,OO0. 

50;  IOO;  500;    IOOO... 

50  ;  100  ;  500;  iooo; 

5000  ;  I0,OO0. 

50;  IOO;  500  ;   IOOO... 

JO;  IOO;  500;  IOOO; 

5000;   10,000. 

50;  IOO;  500 J    IOOO... 
500  ;      IOOO  ;      5000 ; 
10,000. 

50  ;  IOO  ;  500  ;   IOOO  ; 

5000  ;  I0,OOO. 
50;  IOO;  500  ;  IOOO; 

5000 ;           I0,O0O ; 

20,oCO;  50,000. 

50;  IOO;  500;  IOOO; 
JOOO;  10,000. 

50  ;  IOO  ;  500;  IOOO; 
5000;  IO,OCO. 

50;  IOO  ;  SOO;  IOOO  ; 
SOOO  ;          I0,OOO  ; 
2O,OO0;  50,000. 

6  per  ct 

6  per  ct 

j}4  per  ct.... 
1%  per  ct.... 

1 

Redeemable    after    June    50, 
1881. 

Five-twenties  of  1862: 

Redeemable  after  five  and  pay- 
able twenty  years  from  May 
1,  1S62. 

Registered 

SlMES   OF    l88l  : 

Five-twenties  of  1864: 

1881. 

Redeemable  after  five  and  pay- 
able twenty  years  from   No- 
vember 1,  1864. 

Redeemable  after  ten  and  pay- 
able forty  years  from   March 
1,  1864. 

Redeemable  after  five  and  pay- 
able twenty  years  from   No- 
vember 1,  1864. 

Redeemable  after  five  and  pay- 
able twenty   years  from   No- 
vember 1,  1865. 

Redeemable  after  five  and  pay- 
able twenty  years  from   Julv 
1,  1865. 

Redeemable  after  five  and  pay 
able  twenty  years  from  July 
1,  1867. 

Redeemable  after  five  and  pay- 
able twenty  years  from  Julv 
1,  1868. 

Redeemable  after  May  1,  1881. 

Ten-forties  : 

Five-twenties  of  1864: 

Five-twenties  of  1865: 

Consols  of  1865 : 

Consols  of  1867- 

Consols  of  1S6S : 

Funded  Loan  of  1881 : 
July  14,  1S70,  and  January  20,  1S71, 

Sixes  of  1881  : 

July   17  and  August  5,  1S61,  (con- 
tinued under  Department  Circu- 
lar No.  42,  dated  April  II,  1881) 

Redeemable  at  the  pleasure  of 
the  Government. 

Redeemable  at  the  pleasure  of 
the  Government. 

Redeemable  at  the  pleasure  of 
the  Government. 

Sixes  of  1S81  : 

March    J,    1863,  (Continued  under 
Department  Circular  No.  42,  da- 
ted April  II,  1SS1) — 

Funded  Loan  of  1881  : 

July    14,    1870,    and    January    20, 
1871,   (continued   under    Depart- 
ment Circular  No.  52,  dated  May 

i83 


Coupon  Bonds. 

Coupon  bonds  of  the  United  States  are  payable  to  bearer, 
and  pass  by  delivery,  without  endorsement.  They  are  con- 
vertible into  registered  bonds  of  the  same  loan,  but  the  law 
does  not  authorize  the  conversion  of  registered  into  coupon 
bonds. 

.  Coupon  bonds  forwarded  to  the  Department  for  exchange 
into  registered  bonds  should  be  addressed  to  the  Secretary  of 
the  Treasury,  Division  of  Loans  and  Currency. 

There  is  no  expense  attending  the  exchange  at  the  Depart- 
ment; but  when  bonds  are  sent  by  express  the  charges  must 
be  paid  by  the  party  transmitting  them. 

Form  of  Letter  for  Conversion  of  Coupon  Bonds  into  Registered 

Bonds. 

,  ,  ,  18—. 

Hon.  Secretary  op  the  Treasury, 

Washington.  D.  C. 

Sir  :  Herewith  I  send  $ U.  S.  coupon  bonds  of  the  Act  of  July  14th,  1870, 

per  cent,  loan  of ;  which  please  exchange  into  registered  bonds  in  the 

name  of . 

Please  send  the  new  bonds  to  the  subscribed  address. 

Mail  checks  for  the  interest  to , ,  . 


Very  respectfully,  . 

Eegistered  Bonds. 

Registered  bonds  of  the  United  States  differ  from  coupon 
bonds  in  the  following  respects,  namely:  (i)  They  have  in- 
scribed or  expressed  upon  their  face  the  names  of  the  parties 
who  own  them,  denominated  payees  ;  (2)  they  are  payable  only 
to  such  payees  or  their  assigns ;  and  (3)  the  property  or  owner- 
ship in  them  can  be  transferred  only  by  assignment.  For  the 
purpose  of  assigning  them,  there  are  forms  printed  on  the  backs 
of  the  bonds,  together  with  directions  to  be  followed  in  the 
execution  of  such  assignments. 

A  ledger  account  is  opened  in  the  Department  with  each 
holder  of  one  or  more  registered  bonds;  and  in  this  account 
each  bond  is  fully  described.  All  recognized  transfers  must 
be  made  upon  the  loan  books  in  the  office  of  the  Register  of 
the  Treasurv. 


1 84 

Assignment  of  Bonds. 

The  directions  printed  on  the  backs  of  the  bonds  should  be 
carefully  followed  in  the  execution  of  assignments,  and  the 
name  of  the  assignee  should  be  written  plainly  in  the  space 
left  for  that  purpose.  Assignments  must  be  dated  and  prop- 
erly acknowledged. 

If  a  bond  is  to  be  divided  among  two  or  more  parties,  their 
names  and  the  amount  to  each  should  be  stated  in  the  assign- 
ment. If  only  a  part  of  a  bond  is  assigned,  a  new  issue  for  the 
remainder  will  be  made  to  the  former  payee  of  the  whole  bond : 
Provided,  however,  That  the  amount  assigned  shall  correspond 
with  one  or  more  of  the  denominations  in  which  the  bonds 
are  issued. 

Registered  bonds  should  not  be  assigned  in  blank,  as  such 
assignment  would  make  them  payable  to  bearer  and  render 
them  available  to  any  holder  thereof ;  in  other  words,  under 
an  assignment  in  blank  the  title  to  the  bonds  would  pass  by 
delivery. 

A  detached  assignment  should  never  be  resorted  to,  except 
when  the  blank  form  for  an  assignment  which  is  printed  on 
the  bond  shall  have  been  already  used  ;  and  in  this  case  only 
when  there  shall  not  be  sufficient  space  on  the  back  of  the 
bond  for  another  assignment. 

The  payee  should  sign  his  name  to  the  assignment  as  the 
name  is  written  on  the  face  of  the  bond.  If  the  bond  be  issued 
to  a  firm,  the  assigment  must  be  subscribed  in  the  name  of  the 
firm  by  a  member  thereof  who  shall  be  possessed  of  authority 
to  sign  for  the  firm,  of  which  authority  the  officer  witnessing 
the  signature  must  be  satisfied  ;  if  issued  to  joint  owners,  co- 
trustees, executors,  administrators,  or  guardians,  each  person 
must  sign  for  himself ;  if  to  a  corporation  or  company,  the 
official  character  of  the  person  executing  the  assignment,  and 
the  authority  of  such  person  to  dispose  of  the  bond  or  bonds 
in  question,  should  be  duly  verified  by  vote  or  resolution  of  the 
board  of  directors  of  the  corporation  or  company,  certified  un- 
der its  seal.  Where  such  officer  is  authorized  by  virtue  of  his 
office  to  execute  the  assignment,  a  certificate,  under  seal,  of  this 
fact  and  of  his  election  to  the  office,  and  that  he  still  holds  and 


exercises  ^uch  office,  must  be  furnished,  together  with  a  certi- 
fied copy  of  the  charter  or  by-laws  of  such  corporation  or  com- 
pany, showing  the  authority  claimed  thereunder. 

All  such  evidence  of  authority  will  be  placed  on  file  in  the 
Department,  and,  if  general  and  permanent  in  its  character, 
need  not  be  reproduced  in  subsequent  transactions  under  the 
same  power,  if  proper  reference  be  made  thereto. 

ASSIGNMENTS   BY   REPRESENTATIVES   AND   SUCCESSORS. 

In  case  of  death  or  successorship,  the  representative  of  the 
deceased  person,  or  the  successor,  must  furnish  official  evidence 
of  such  decease  or  successorship,  and  of  his  own  appointment, 
authority,  or  power.  An  executor  or  administrator  may  assign 
bonds  standing  in  the  name  of  the  deceased  person  in  whose 
stead  such  executor  or  administrator  shall  be  acting.  Where 
there  are  two  or  more  legal  representatives,  all  must  unite  in 
the  assignment,  unless  by  a  decree  of  court  or  testamentary 
provision  some  one  or  more  of  them  is  or  are  designated  and 
empowered  to  dispose  of  the  bonds.  If  the  bonds  had  been 
held  by  the  deceased  in  the  capacity  of  a  fiduciary  or  trustee, 
a  court  having  jurisdiction  must  appoint  a  successor,  who 
should  execute  the  assignment  in  order  to  secure  the  transfer- 
or payment  of  the  bonds. 

An  executor,  administrator,  trustee,  guardian,  or  attorney 
cannot  assign  bonds  to  himself,  unless  he  be  specially  author- 
ized to  do  so  by  a  court  possessing  jurisdiction  of  the  matter. 

FOREIGN   SUCCESSORSHIP   ASSIGNMENTS. 

Where  a  payee,  at  the  time  of  his  death,  was  a  resident  of  a 
foreign  country,  the  party  claiming  to  direct  and  execute  the 
transfer  must  furnish  an  exemplified  copy  of  the  will  or  other 
instrument  conveying  the  requisite  authority,  duly  certified 
under  the  hand  and  seal  of  the  proper  officer,  attested  by  the 
certificate  of  a  United  States  minister,  charge,  consul,  vice- 
consul,  or  commercial  agent,  or,  if  there  be  none  such  acces- 
sible, (which  fact  shall,  in  such  case,  be  certified,)  by  that  of 
a  notary  public,  to  the  effect  that  such  exemplified  copy  is 
executed  and  granted  by  the  proper  tribunal  or  officer,  and  is 
in  due  form  and  according  to  the  laws  of  that  country.  The 
assignment  should  be  executed  as  hereinbefore  directed. 


i86 


ASSIGNMENTS   BY   ATTORNEY. 

Persons  entitled  to  assign  bonds  may  appoint  for  that  pur- 
pose an  attorney,  who,  by  virtue  of  the  authority  so  conferred, 
can  execute  the  assignment  in  the  same  manner  as  provided 
for  the  constituent. 

No  officer  of  the  Treasury  of  the  United  States  should  be 
selected  as  such  attorney. 

Powers  of  attorney  authorizing  the  assignment  of  bonds 
should  be  sent,  for  record,  to  the  Register  of  the  Treasury. 

Form  of  Power  of  Attorney. 
Know  all  men  by  these  peesents  : 

That  I, ,  do  hereby  appoint my  attorney  to  assign 

any  and  all  United  States  bonds  now  standing  (or  which  may  hereafter  stand)  in  my 
name  on  the  books  of  the  Treasury  Department,  granting  to  said  attorney  full  power 
to  appoint  one  or  more  substitutes  for  that  purpose,  hereby  ratifying  and  confirming 
all  that  may  be  lawfully  done  by  virtue  hereof. 

Witness  my  hand  and  seal  this  the day  of ,  A.  D.  18 — . 

[seal.] 

Executed  before  me  this  the  day  of ,  A.  D.  18 — . 


[Official  seal.] 


Note. — To  be  verified  in  accordance  with  instructions  contained  on  page  18*7,  under 
head  of  acknowledgments. 

Form  of  Authority  by  Resolution. 

At  a  regular  meeting  of  the  board  of  directors  of  the 1 ,  of 

,  ,  held ,  18 — ,  it  was,  on  motion, 


"  Resolved,  That  A.  B.,  president,  and  0.  D.,  cashier,  are,  or  either  of  them  is,  here- 
by authorized  and  empowered  to  assign  any  and  all  United  States  bonds  now 
standing  (or  which  may  hereafter  stand)  in  the  name  of  this  bank  [or  institution]." 

I  certify  that  the  above  is  a  true  copy  from  the  minutes. 


[Corporate  seal.]  Secretary  of  the  Board. 

Note. — This  resolution  should  be  certified  by  some  officer  of  the  institution  other 
than  the  one  empowered  to  assign  the  bonds. 

It  is  recommended  that  resolutions  be  adopted  only  at  regu- 
lar meetings.  But  when  passed  at  a  special  meeting,  the 
certificate  may  be  as  follows: 

We  certify  that  at  a  special  meeting  of  the  board   of  directors  of ,  duly 

held  at ,  on  the  day  of  ,  at  —  o'clock  —  M.,  18 — ,  the  fore- 
going resolution  was  adopted,  and  is  now  in  full  force. 

And  we  certify  that  notice  was  duly  given,  personally,  to  all  the  members  of  the 


said  board  of  directors  of  the  time  and  place  of  said  meeting,  and  of  the  object 

thereof,  for  more  than  days  prior  thereto,  and  in  time  to  enable  all  to  attend 

said  meeting;  and  that  at  such  meeting  so  held  a  quorum  of  all  the  members  of 
said  board  was  present  and  voted  for  the  adoption  of  said  resolution. 

Form  of  Authority  under  By-laws. 

At  the  annual  meeting  of  the  stockholders  of  the ,  of . 

,  held ,  18 — , was  duly  elected  president,  and  


was  duly  elected  cashier ;  and  as  such  they  are  jointly  or  severally  em- 
powered by  the  by-laws  (a  certified  copy  of  which  is  hereto  annexed)  to  sell  and 
assign  any  and  all  United  States  bonds  now  standing  [or  which  may  hereafter  stand) 
in  the  name  of  this  bank  [or  institution]. 

,  Secretary. 

[Seal  of  bank  or  institution.] 

ACKNOWLEDGMENTS 

of  assignments,  when  not  made  at  this  Department,  must  be 
made  either  before  an  Assistant  Treasurer  of  the  United  States, 
a  United  States  judge  or  district  attorney,  clerk  of  a  United 
States  court,  collector  of  customs  or  internal  revenue,  or  presi- 
dent or  cashier  of  a  National  bank. 

A  notary  public  is  authorized  to  take  acknowledgments  only 
on  the  Pacific  Railroad  bonds  and  on  the  3  per  cent,  bonds  of 
1882.  The  witnessing  officer  should  append  his  official  title 
and  affix  his  seal  of  office,  if  he  have  one;  if  he  have  no  seal 
of  office,  he  should  certify  such  to  be  the  fact.  The  president 
or  cashier  of  a  National  bank  must  append  the  title  and  affix 
the  seal  of  the  bank.  The  impress  of  the  seal  must  in  every 
case  be  made  upon  the  bond. 

FOREIGN   ACKNOWLEDGMENTS 

may  be  made  before  a  United  States  minister,  charge,  consul, 
vice  consul,  or  commercial  agent.  A  notary  public,  or  other 
competent  officer,  in  a  foreign  country  may  take  acknowledg- 
ments; but  his  official  character  and  jurisdiction  must  be  prop- 
erly verified.  *  The  official  seal,  where  there  is  one,  should  in 
all  cases  be  affixed,  as  per  foregoing  direction;  and  where  there 
is  none  this  fact  should  be  made  known  and  attested. 

EXECUTION   OF   POWERS. 

Powers  of  attorney  for  the  transfer  of  bonds  must  be  ac- 
knowledged in  the  presence  of  some  one  of  the  officers  author- 

*See  under  head  "Foreign  successorship  assignments,"  page  185. 


i88 

ized  to  take  acknowledgments  of  assignments;  and  where  such 
officer  has  an  official  seal,  it  must  be  affixed;  where  he  has 
none  he  should  so  state. 

POWERS  OF  SUBSTITUTION 
must  be  executed  and  acknowledged  in  the  same  manner  as 
powers  of  attorney,  and  should  likewise  follow  the  same  gen- 
eral form. 

TRANSMISSION   OF   BONDS. 

When  registered  bonds  are  properly  assigned,  they  should 
be  transmitted  to  the  Register  of  the  Treasury  for  reissue,  and 
should  be  accompanied  by  a  letter  of  explicit  instructions, 
stating  the  amount  enclosed,  the  loan  to  which  the  bonds 
belong,  the  denominations  of  the  bonds  desired  in  exchange 
therefor,  the  name  and  residence  of  each  assignee,  and  the  post- 
office  address  to  which  it  is  desired  the  interest  checks  shall 
be  mailed. 

When  bonds  of  different  loans  are  forwarded  in  one  remit- 
tance, a  separate  letter  of  instructions  should  accompany  the 
bonds  of  each  loan. 

When  coupon  and  registered  bonds  are  transmitted  at  the 
same  time,  the  former  should  be  sent  to  the  Secretary  of  the 
Treasury,  and  the  latter  to  the  Register  of  the  Treasury. 

Form  of  Letter  Transmitting  Registered  Bonds  for  Transfer. 


Hon.  Register  of  the  Treasury, 

Washington,  D.  C. 

Sir  :  Herewith  you  will  receive  $ U.  S.  registered  bonds  of  the per 

cent,  loan  of ,  which  please  transfer,  as  per  assignment,  to of 


Please  send  the  new  bonds  to  the  subscribed  address. 
Mail  checks  for  the  interest  to , 


Very  respectfully, 


NEW   BONDS. 

Registered  bonds  received  for  transfer  are  cancelled,  and 
new  bonds  in  their  stead  are  issued  in  the  name  of  the  assignee. 
These  bear  interest  from  the  first  day  of  the  quarter  or  half 
year  (as  their  interest  term  may  run)  in  which  the  transfer  shall 
have  been  made.  As  a  rule,  returns  are  made  on  the  same  day 
that  the  bonds  are  received,  and  made  invariably  by  registered 


i8g 

mail  unless  otherwise  instructed.  When  bonds  are  sent  or 
returned  by  express  the  entire  expense  thus  incurred  must  be 
borne  by  the  party  desiring  the  transfer. 

NO  FKES 
will  be  charged  by  a  United  States  minister,  charge,  consul, 
vice-consul,  or  commercial  agent  for  witnessing  and  certifying 
an  assignment  of,  or  power  to  assign,  bonds,  or  collect  interest 
thereon.  No  charge  is  made  by  the  Department  for  trans- 
ferring registered  bonds. 

Interest  on  Registered  Bonds. 
The  interest  on  registered  bonds  of  the  existing  loans  falls 
due  upon  the  following  dates,  respectively : 

Currency  sixes,  Pacific  Railroad January  1  ;  July  1. 

Four-and-a-half  per  cent,  funded  loan  of  1891....March  1  :  June  1  :  Sept.  1  ;  Dec.  1. 

Four  per  cent,  consols  of  1907 January  1  ;  April  1  ;  July  1  :  October  1. 

Three  per  cent,  funded  loan  of  1882 February  ]  :   May  1  :  Aug.  1  :  Nov.  1. 

Interest  on  registered  bonds  of  the  above-described  loans  is 
paid  by  checks  drawn  at  this  Department.  These  checks  will 
be  sent  by  mail  when  the  post-office  address  is  known  ;  when 
this  is  not  known  they  will  be  held  by  the  Treasurer  of  the 
United  States  until  called  for  by  the  payees  thereof. 

The  checks  are  payable,  when  properly  indorsed,  on  pre- 
sentation at  the  United  States  Treasury  or  at  the  office  of  any 
Assistant  Treasurer  of  the  United  States. 

Holders  of  these  bonds  should  notify  the  Register  of  the 
Treasury  of  any  change  in  their  post-office  address  at  least 
fifteen  days  before  the  interest  falls  due ;  and  in  case  of  the 
appointment  of  an  attorney  to  indorse  the  interest  checks,  no- 
tice of  this  fact  should  likewise  be  given  to  the  Register.  Such 
holders  should  also  transmit  to  the  First  Auditor  of  the  Treas- 
ury all  powers  of  attorney  authorizing  the  indorsement  of  in- 
terest checks,  and  advise  him  specifically,  at  which  of  the 
offices  referred  to  above  it  is  desired  that  the  interest  checks, 
under  such  powers,  shall  be  paid. 

CLOSING   OF   TRANSFER   BOOKS. 

For  the  purpose  of  preparing  the  interest  schedules,  the 
transfer  books  are  closed  during  the  month  immediately  pre- 
ceding the  date  of  payment  of  the  interest. 


190 

If  bonds  forwarded  for  transfer  be  not  received  prior  to  or 
upon  the  day  fixed  for  closing  the  transfer  books,  the  transfer 
•will  not  be  effected  until  after  the  reopening  of  the  books  ;  and 
consequently  the  interest  for  that  quarter  or  half  year  (as  the 
interest  term  may  be)  will  be  declared  in  favor  of  the  parties 
whose  names  appear  upon  the  face  of  the  old  bonds,  and  to 
them  the  assignees  must  look  for  any  interest  claimed. 

Form  of  Power  of  Attorney  to  Collect  Interest  Checks. 

Know  all  men  by  these  presents,  that ,  of ,  do  appoint 

attorney  to  receive  lrom  the  proper  officer  and  to  indorse  checks  for 

interest*  in name  on  the  books  of  the  Treasury  Department  of  the  United 

States ;  granting  to  said  attorney  power  to  appoint  one  or  more  substitutes  for  the 
purposes  herein  expressed ;  hereby  ratifying  and  confirming  all  that  may  lawfully  be 
done  by  virtue  hereof. 

Witness hand-  and  seal-  this  day  of ,  18 — . 


Signed,  sealed  and  acknowledged  in  the  presence  of — 


[L.  S.] 
[L.  S.] 


(To  be  acknowledged  as  directed  below.) 

♦When  intended  to  be  special,  insert  [due  on  the day  of ,  18 — ,  on  all 

bonds  standing  in .]     When  general,  insert  [now  due  and  which  may  here- 
after accrue  on  all  bonds  standing,  or  which  may  hereafter  stand,  in .] 

EXECUTION   OF   POWERS   OF  ATTORNEY  TO  INDORSE   INTEREST 

CHECKS. 

Powers  of  attorney  must  be  acknowledged  either  before  the 
Treasurer  or  an  Assistant  Treasurer  of  the  United  States,  a 
United  States  judge,  United  States  district  attorney,  clerk  of  the 
United  States  court,  collector  of  customs,  collector  of  internal 
revenue,  president  or  cashier  of  a  National  bank,  or  a  notary 
public.  If  in  a  foreign  country,  powers  must  be  acknowl- 
edged either  before  a  United  States  minister,  charge,  consul, 
vice-consul,  commercial  agent,  or  notary  public.  If  before  the 
latter,  his  official  character  and  the  genuineness  of  his  signa- 
ture must  be  properly  verified. 

The  acknowledging  officer  must  add  his  official  designation, 
residence,  and  seal,  if  he  have  one;  if  he  have  no  seal  of  office, 
he  should  certify  such  to  be  the  fact. 

Powers  of  attorney  and  testamentary  evidence  designed  as 
authority  to  collect  interest  checks  should  be  filed  with  the 
First  Auditor  of  the  Treasury. 


191 

Form  of  Authority  by  Resolution  for  the  Indorsement  of 
Interest  Checks. 

At  a  regular  meeting  of ,  held  at ,  in   the  State  of ,  on  the 

day  of .  18 — ,  a  quorum  being  present,  it  was,  on  motion, 

Resolved,  That be,  and  is  hereby,  authorized  to  receipt  for  and  to 

indorse  checks  for  interest  due,  or  to  become  due,  on  all  United  States  bonds  regis- 
tered in  the  name  of on  the  books  of  the  Treasury  Department,  with 

power  to  appoint  one  or  more  substitutes  for  the  purposes  herein  expressed,  until 
such  authority  is  officially  revoked,  and  notice  of  revocation  is  properly  given  to 
the  Treasury  Department. 

A  true  copy  of  the  minutes. 

(Signed.)  ,  President. 

[seal.]     Attest :  ,  Secretary. 

Note.— Where  the  society  or  institution  has  no  seal,  it  will  be  requisite  to  ac- 
knowledge the  instrument  before  a  notary  or  some  other  competent  ofEcer  having 
an  official  seal.  If  the  president,  cashier,  secretary,  or  treasurer  be  authorized  to 
indorse  the  checks,  the  instrument  must  be  certified  by  an  officer  other  than  the 
one  empowered  to  make  the  indorsement. 

The  First  Auditor  of  the  Treasury  should  be  advised  where  interest  checks  in- 
dorsed by  attorneys  will  be  presented  for  payment. 

INTEREST  TO  JOINT  HOLDERS  OF  REGISTERED  BONDS. 

Interest  will  be  paid  to  any  one  of  several  joint  holders,  or 

cotrustees,   executors,   administrators,  or  guardians;   but   in 

the  execution  to  a  third  party  of  a  power  to  collect  interest 

checks  all  must  join.     In  case  of  the  death  of  any  such  joint 

holders,  co-trustees,  &c,    the  survivor  or   survivors   will   be 

recognized  as  having  full  authority,  upon  due  proof  of  such 

death  and  survivorship. 

Payment  of  Interest  on  United  States  Registered  Bonds  In- 
scribed in  the  Names  of  Minors. 

The  following  synopsis  of  the  decision  of  the  First  Comp- 
troller of  the  Treasury,  of  February  4th,  1881,  respecting  the 
payment  of  interest  on  United  States  registered  bonds  in- 
scribed in  the  names  of  minors,  is  published  for  the  informa- 
tion and  guidance  of  the  officers  of  this  Department: 

1.  When  Government  bonds  are  registered  in  the  names  of 
infants,  interest  checks  issued  in  payment  of  interest  thereon 
will  be  delivered  and  paid  only  to  the  proper  guardian  of  such 
infants,  when  the  Secretary  of  the  Treasury  has  been  notified 
of  such  infancy. 

2.  Neither  the  father  nor  mother  of  an  infant  has  the  right, 
as  a  general  rule,  to  indorse  or  collect  such  interest  checks. 


192 

3.  The  guardian  of  an  infant,  in  order  to  indorse  and  collect 
interest  checks  in  favor  of  his  ward,  is  required  to  file  with 
the  First  Auditor  evidence  (1)  of  guardianship,  (2)  of  his 
authority-  being  in  force,  and  (3)  of  the  identity  of  his  ward  as 
the  payee  in  the  bonds. 

4.  The  Government  is  not  liable  to  refund  to  an  infant,  on 
his  arriving  at  the  age  of  majority,  money  paid  to  him  on  his 
indorsement  of  interest  checks  during  minority,  when  the 
Secretary  of  the  Treasury  had  not  been  notified  of  the  fact  of 
infancy. 

^  Department  Circular  No.  6,  dated  February  7th,  1881.) 
UNCLAIMED  INTEREST. 
The  interest  on  registered  bonds  of  the  loans  authorized 
previously  to  the  funded  loans,  (Act  of  July  14th,  1870,)  which 
has  been  returned  to  the  Treasury  as  unclaimed,  can  be  col- 
lected only  in  person  or  by  attorney  at  the  office  of  the 
Treasurer  of  the  United  States,  in  Washington. 

For  the  convenience  of  the  public,  and  to  save  charges, 
powers  to  collect  specified  unclaimed  interest  may  be  made  in 
favor  of  the  Chief  of  the  Division  of  Loans  and  Currency 
of  the  Secretary's  office,  under  authority  of  the  following 
order  : 

"  Treasury  Department, 

'•Office  of  the  Secretary.  May  1,  1879. 

"  Ordered  :  That  from  and  after  this  date,  the  pro  forma  receipt  on  the  books  of 

this  Department  for  interest  on  registered  bonds  of  the  United  States,  due  claimants 

who  do  not  desire  to  employ  resident  attorneys,  may  be  signed  by  the  Chief  of  the 

Division  of  Loans  and  Currency  of  this  office,  or,  in  his  absence,  by  the  acting  chief 

of  said  division,  as  attorney  for  the  claimants. 

"  That  checks  in  payment  of  such  interest  drawn  by  the  Treasurer  of  the  United 

States  in  favor  of  the  claimants  be  transmitted  to  their  address  by  the  officer  acting 

as  attorney. 

'•JOHN  B.  HAWLEY, 

" Acting  Secretary." 

TRANSLATIONS. 

Powers  of  attorney,  and  all  other  legal  documents  executed 
in  the  United  States,  must  be  in  the  English  language.  If 
executed  abroad  in  any  other  language,  such  powers  must  be 
accompanied  by  an  accurate  translation  into  English,  and  by  a 
sworn  certificate  of  the  person  who  made  such  translation, 
properly  acknowledged  before  a  notary  public  or  other  com- 


i93 

petent  officer  having  a  seal,  to  the  effect  that  the  translation  is 
correct  and  complete. 

Lost  Registered  Bonds. 
In  case  of  the  loss  of  registered  bonds,  the  Secretary  of  the 
Treasury  should  be  promptly  notified,  in  order  that  a  caveat 
may  be  entered  against  the  transfer  of  the  missing  bonds,  on 
the  books  of  the  Department. 

Form  of  Request  for  Caveat. 

-,  .  ,  18—. 

Hon.  Secretary  of  the  Treasury, 

Washington,  D.  C. 

Sir:  The   registered   bonds  described   below,  standing   in   my  name,  were  stolen 

from   the  undersigned   on   or  about  the of last.     Please  enter  a  caveat 

against  their  transfer: 

No.  ,   for  $ ,  Act  of ,    18 — ,   percent.,   and   No.  .   for 

$ ,  Act  of ,  18 — , per  cent. 

Very  respectfully, 


Lost  Coupon  Bonds,  Notes,  and  Coupons. 

In  consequence  of  the  increasing  trouble,  wholly  without 
practical  benefit,  arising  from  notices  which  are  constantly  re- 
ceived at  the  Department,  respecting  the  loss  of  coupon  bonds, 
which  are  payable  to  bearer,  and  of  Treasury  notes  issued 
and  remaining  in  blank  at  the  time  of  loss,  it  becomes  neces- 
sary to  give  this  public  notice,  that  the  Government  cannot 
protect,  and  will  not  undertake  to  protect,  the  owners  of  such 
bonds  and  notes  against  the  consequences  of  their  own  fault  or 
misfortune. 

Hereafter  all  bonds,  notes,  and  coupons,  payable  to  bearer, 
and  Treasury  notes  issued  and  remaining  in  blank,  will  be 
paid  to  the  party  presenting  them  in  pursuance  of  the  regula- 
tions of  the  Department,  in  the  course  of  regular  business; 
and  no  attention  will  be  paid  to  caveats  which  may  be  filed  for 
the  purpose  of  preventing  such  payment. 

(Department  Circular  of  April  2'7th,  1867.) 
13 


i94 


DESTROYED  AND  DEFACED  BONDS  AND  LOST  REGISTERED 
BONDS  OF  THE  UNITED  STATES. 


The  following  provisions  of  the  Revised  Statutes  of  the 
United  States,  and  the  regulations  thereunder,  concerning  re- 
lief in  cases  of  bonds  of  the  United  States  which  have  been 
defaced,  destroyed,  or  lost,  are  published  for  the  information 
and  guidance  of  all  concerned. 

Duplicates  for  Destroyed  or  Defaced  Bonds. 

Section  3702. — Whenever  it  appears  to  the  Secretary  of  the 
Treasury,  by  clear  and  unequivocal  proof,  that  any  interest- 
bearing  bond  of  the  United  States  has,  without  bad  faith  upon 
the  part  of  the  owner,  been  destroyed,  wholly  or  in  part,  or  so 
defaced  as  to  impair  its  value  to  the  owner,  and  such  bond  is 
identified  by  number  and  description,  the  Secretary  of  the 
Treasury  shall,  under  such  regulations  and  with  such  restric- 
tions as  to  time  and  retention  for  security  or  otherwise  as  he 
may  prescribe,  issue  a  duplicate  thereof,  having  the  same  time 
to  run,  bearing  like  interest  as  the  bond  so  proved  to  have 
been  destroyed  or  defaced,  and  so  marked  as  to  show  the  origi- 
nal number  of  the  bond  destroyed  and  the  date  thereof.  But 
when  such  destroyed  or  defaced  bonds  appear  to  have  been  of 
such  a  class  or  series  as  has  been  or  may,  before  such  applica- 
tion, be  called  in  for  redemption,  instead  of  issuing  duplicates 
thereof,  they  shall  be  paid,  with  such  interest  only  as  would 
have  been  paid  if  they  had  been  presented  in  accordance  with 
such  call. 

Section  3703. — The  owner  of  such  destroyed  or  defaced  bond 
shall  surrender  the  same,  or  so  much  thereof  as  may  remain, 
and  shall  file  in  the  Treasury  a  bond  in  a  penal  sum  of  double 
the  amount  of  the  destroyed  or  defaced  bond,  and  the  interest 
which  would  accrue  thereon  until  the  principal  becomes  due 
and  payable,  with  two  good  and  sufficient  sureties,  residents 
of  the  United  States,  to  be  approved  by  the  Secretary  of  the 
Treasury,  with  condition  to  indemnify  and  save  harmless  the 


195 

United  States  from  any  claim  upon  such  destroyed  or  defaced 

bond. 

Duplicates  for  Lost  Registered  Bonds. 

Section  3704. — Whenever  it  is  proved  to  the  Secretary  of 
the  Treasury,  by  clear  and  satisfactory  evidence,  that  any  duly 
registered  bond  of  the  United  States,  bearing  interest,  issued 
for  valuable  consideration  in  pursuance  of  law,  has  been  lost 
or  destroyed,  so  that  the  same  is  not  held  by  any  person  as  his 
own  property,  the  Secretary  shall  issue  a  duplicate  of  such 
registered  bond,  of  like  amount,  and  bearing  like  interest  and 
marked  in  the  like  manner  as  the  bond  so  proved  to  be  lost  or 
destroyed. 

Section  3705. — The  owner  of  such  missing  bond  shall  first 
file  in  the  Treasury  a  bond  in  the  penal  sum  equal  to  the 
amount  of  such  missing  bond,  and  the  interest  which  would 
accrue  thereon,  until  the  principal  thereof  becomes  due  and 
payable,  with  two  good  and  sufficient  sureties,  residents  of  the 
United  States,  to  be  approved  by  the  Secretary  of  the  Treas- 
ury, with  condition  to  indemnify  and  save  harmless  the  United 
States  from  any  claim  because  of  the  lost  or  destroyed  bond. 

Parties  presenting  claims  on  account  of  a  coupon  or  regis- 
tered bond  of  the  United  States  which  has  been  destroyed 
wholly,  or  in  part,  or  on  account  of  a  registered  bond  which 
has  been  lost,  will  be  required  to  present  evidence  showing — 

1st.  The  number,  denomination,  date  of  authorizing  act, 
and  rate  of  interest  of  such  bond;  whether  coupon  or  registered ;. 
and,  if  registered,  the  name  of  the  payee.  In  the  case  of  a 
registered  bond,  it  should  also  be  stated  whether  it  had  been 
assigned  or  not  previous  to,  or  since,  the  alleged  loss  or  destruc- 
tion, and,  if  assigned,  by  whom,  and  whether  assigned  in  blank 
or  to  some  person  specifically  by  name;  and  if  assigned  in  the 
latter  manner  the  name  of  the  assignee  should  be  given. 

2d.  The  time  and  place  of  purchase,  of  whom  purchased, 
and  the  consideration  paid. 

3d.  The  place  of  deposit  of  the  missing  bond;  whether  or 
not  any  person  or  persons,  other  than  the  owner,  had  access 
thereto;  and  in  the  event  of  its  having  been  accessible  to  other 
parties,  their  affidavits,  in  addition  to  that  of  the  owner,  should 


196 

be  furnished,  showing  their  knowledge  of  the  existence  of  the 
bond,  and  of  the  fact  of  its  loss  or  destruction. 

4th.  The  material  facts  and  circumstances  connected  with  the 
loss  or  destruction  of  the  bond. 

5th.  It  should  be  shown  by  the  affidavits  of  credible  persons, 
if  practicable  by  United  States  officers,  that  the  statements  of 
the  claimant  as  set  forth  in  his  affidavit  are  worthy  of  the  con- 
fidence of  the  Department,  and  that  he  is  the  identical  person 
named  in  the  application. 

In  all  cases  the  evidence  should  be  as  full  and  clear  as  possi- 
ble, that  there  may  be  no  doubt  of  the  good  faith  of  the  claim- 
ant. Proofs  may  be  made  by  affidavits  duly  authenticated,  and 
by  such  other  competent  evidence  as  may  be  in  the  possession 
of  the  claimant. 

General  Form  of  Affidavit. 


Personally  appeared  before  me,  a  notary  public  in  and  for  the  city  of ,  county 

•of and  State  of ,  the  subscriber, ,  who,  being  duly  sworn 

according  to  law,  deposes  and  says  that is  the  lawful  owner  of  the  follow- 
ing described  registered  bonds  of  the  United  States,  viz.: 

No. ,  for  $ ,  Act  of ,  18 — , per  cent.,  and  No. .  for 

$ ,  Act  of  ,  18 — ,  per  cent.,  registered  in  name  on  the 

books  of  the  Treasury  Department,  ,  18 — ;  that  no  assignment  or  transfer  of 

said  bonds  [or  cither  of  them]  has  been  made  by  or  attorney,  either 

in  blank  or  by  a  specific  assignment,  or  in  any  manner  whatever;  that  said  bonds 
have  not,  nor  has  either  of  them,  by  hypothecation,  pledge,  loan,  or  otherwise,  passed 

from  the  custody  or  control  of  said with  [his  or  her]  knowledge  or  consent ; 

that  the  said  bonds  were  stolen  from ,  the  said ,  at .  ou 

the  ,  by  some  person  or  persons  unknown  to  ;  and  that  due  diligence 

has  been  exercised  in  endeavoring  to  recover  the  said  bonds,  without  success. 
£State  what  has  been  done.] 


Sworn  to  and  subscribed  before  me  this  the day  of ,  A.  D.  18 — . 

And  I  certify  that  said is  personally  well  known  to   me   to  be  the 

identical  person  mentioned  in  the  foregoing  affidavit. 

[notarial  seal.]  , 

Notary  Public. 

Affidavits  and  other  evidence  pertaining  to  the  claim  should 
be  transmitted  to  the  Secretary  of  the  Treasury.  Upon  re- 
ceipt of  such  documentary  evidence  it  will  be  referred  to  the 
First  Comptroller  of  the  Treasury  Department  for  his  decision 


i97 

as  to  its  sufficiency.  The  applicant  will  be  advised  of  the 
decision  as  soon  as  it  is  reached.  If  it  be  favorable  to  such 
applicant,  a  blank  indemnity  bond  will  be  forwarded  to  him 
for  execution;  and  when  this  indemnity  bond  shall  have  been 
duly  executed,  returned  to  the  Department,  and  approved  by 
the  First  Comptroller  and  the  Secretary,  the  relief  desired  will 
be  granted. 

A  duplicate  in  lieu  of  a  lost  registered  bond  will  not  be 
issued  within  six  months  from  the  time  of  the  alleged  loss. 

The  interest  on  an  uncalled  registered  bond  will  be  paid  to 
the  payee  thereof  even  though  the  bond  has  been  lost  or  de- 
stroyed. 

Under  a  decision  of  the  Attorney-General  of  the  United 
States  of  January  29th,  1878,  the  Secretary  of  the  Treasury 
cannot  give  relief  in  cases  where  coupons  previously  detached 
from  the  bonds  have  been  destroyed.  The  decision  makes  a 
distinction  between  coupons  destroyed  when  still  attached  to 
the  bond  and  those  detached  and  afterwards  destroyed.  In 
the  former  case  it  would  amount  to  a  partial  destruction  or 
defacement  of  the  bonds  themselves  ;  in  the  latter,  the  coupons 
form  no  part  of  the  bonds,  but  are  then  the  basis  for  inde- 
pendent claims,  possessing  all  the  essential  attributes  of  com- 
mercial paper.  That  is,  a  claimant  for  relief  for  a  coupon  de- 
stroyed while  still  attached  to  bond  can  get  it  from  the  Secre- 
tarv  of  the  Treasury,  under  the  provisions  of  Section  3702  \ 
but  if  destroyed  after  detachment,  the  claimant  must  present 
his  claim  in  the  usual  manner,  and  await  action  of  Congress. 

Called  Bonds. 

All  United  States  called  bonds  forwarded  for  redemption 
should  be  addressed  to  the  Secretary  of  the  Treasury,  Division 
of  Loans  and  Currency.  When  registered  bonds  are  so  for- 
warded they  should  be  assigned  to  "the  Secretary  of  the 
Treasury  for  redemption."  Assignments  must  be  dated  and 
properly  acknowledged,  as  prescribed  in  the  note  printed  on 
the  back  of  each  bond. 

Where  checks  in  payment  of  registered  bonds  are  desired  in 
favor  of  any  one  but  the  payee,  the  bonds  should  be  assigned 
to  the  "Secretary  of  the  Treasury  for  redemption  for  account 


198 

of" — (here  insert  the  name  of  the  person  or  persons  to  whose 

order  the  check  should  be  made  payable.) 

Regulations  in  regard  to  Coupons  Detached  from  Called  Bonds. 

When  coupons  detached  from  bonds  that  have  been  called 
in  for  redemption  are  presented  for  payment,  the  Department 
will  pay  such  portion  of  the  interest  specified  in  such  coupons 
as  had  accrued  at  the  day  fixed  in  the  call  for  the  redemption 
of  the  bonds,  and  no  more,  unless  the  party  presenting  them 
claims  payment  of  their  nominal  value,  in  which  case  the  De- 
partment will  retain  the  coupons  until  the  bonds  from  which 
they  were  detached  shall  have  been  presented  and  the  conflict- 
ing claims  adjusted. 

When  a  called  bond  is  presented  for  redemption  from  which 
a  coupon,  maturing  after  the  day  fixed  in  the  call  for  such 
redemption,  shall  have  been  detached,  the  nominal  value  of 
such  coupon  shall  be  deducted  from  the  sum  due  upon  the 
bond,  unless  the  coupon  shall  have  been  paid  as  above ;  the 
sum  thus  deducted  to  be  retained  to  await  the  presentation 
of  the  coupon  and  a  settlement. 

All  correspondence  in  relation  to  bonds  that  have  been  called 
in  for  redemption,  or  coupons  belonging  thereto,  should  be 
addressed  to  the  "Loan  Division,"  Secretary's  Office. 

(Department  Circular  No.  48,  dated  May  9th,  18T2.) 

Exemption  of  United  States  Bonds  from  Taxation. 
Section  3701  of  the  Revised  Statutes  provides  as  follows : 
■"All  stocks,  bonds,  Treasury  notes,  and  other  obligations  of 
the  United  States  shall  be  exempt  from  taxation  by  or  under 
State  or  municipal  or  local  authority. ' '  This  section  makes 
the  exemption  from  taxation  binding  only  upon  "State  or 
municipal  or  local  authority ; "  but,  according  to  the  express 
terms  of  the  Act  of  Congress  of  July  14th,  1870,  the  bonds 
and  the  interest  thereon  of  the  funded  loans  which  are  thereby 
authorized — namely,  the  loan  of  1881,  the  loan  of  1891,  and 
the  four-per-cent.  consols  of  1907 — "shall  be  exempt  from  the 
payment  of  all  taxes  or  duties  of  the  United  States,  as  well  as 
from  taxation  in  any  form  by  or  under  State,  municipal,  or 
local  authority  ;  and  the  said  bonds  shall  have  set  forth  and 
expressed  upon  their  face  the  above-specified  conditions. ' ' 

(See  also  pages  53  and  54  of  this  work.) 


i99 


NATIONAL  BANKS  AS  U.  S.  DEPOSITARIES. 


Division  of  Public  Moneys,  Office  of  Secretary  of  the  Treasury. 

The  Secretary  of  the  Treasury  is  authorized  under  Section 
5153,  page  23,  to  designate  National  banks  as  depositaries  of 
Government  funds.  Application  should  be  made  to  him  in 
writing  for  such  designation.  The  Secretary  is  governed  in 
this  matter  by  the  necessities  of  the  public  service. 

Banks  so  designated  are  required  to  deposit  U.  S.  bonds  with 
the  Treasurer  of  U.  S.  as  security,  in  such  amounts  as  the  Sec- 
retary may  deem  proper,  but  in  no  case  is  the  amount  required 
less  than  $50,000. 

Under  the  provisions  of  Section  3620  money  advanced  to  dis- 
bursing officers  of  the  U.  S.  may  be  deposited  in  a  National 
bank  other  than  a  U.  S.  depositary,  when  in  the  opinion  of 
the  Secretary  it  is  essential  to  the  public  interests.  The  desig- 
nation is  made  by  the  Secretary. 

Disposition  of  Certificates  of  Deposit. 

1 .  The  originals  of  certificates  of  deposit  for  all  public  moneys, 
except  as  stated  in  paragraph  2,  should  be  forwarded  to  the 
Secretary  of  the  Treasury  by  the  depositors  immediately  upon 
their  issue,  and  it  should  be  seen  that  the  amounts  are  correct. 

2.  Exceptions:  Originals  of  certificates  issued  to  disbursing 
officers  for  funds  deposited  to  their  official  credit,  and  subject 
to  the  payment  of  their  checks,  should  be  retained  by  them. 

Those  issued  for  the  transfer  of  funds  from  one  Government 
depository  to  another,  and  on  account  of  the  five  per  cent. 
National  bank  redemption  fund,  should  be  forwarded  to  the 
Treasurer  of  the  United  States. 

Those  issued  for  the  deposit  of  moneys  pertaining  to  the 
Post  Office  Department  should  be  forwarded  to  the  Third 
Assistant  Postmaster  General. 

3.  Those  in  favor  of  customs  officers  where  naval  officers 
are  located,  should  be  issued  in  triplicate,  the  duplicates  trans- 
mitted to  the  naval  officer,  and  the  triplicates  retained  by  the 
depositors.     Those  in  favor  of  customs  officers  at  other  ports 


200 

should  be  issued  in  duplicate,  and  the  duplicates  retained  by 
the  depositors. 

4.  Those  in  favor  of  collectors  of  internal  revenue,  or  of 
other  persons,  on  account  of  internal  revenue  collections,  inter- 
nal revenue  stamps,  or  repayments  of  disbursing  funds,  should 
be  issued  in  triplicate,  the  duplicates  transmitted  to  the  Com- 
missioner of  Internal  Revenue,  and  the  triplicates  retained  by 
the  depositors. 

5.  Those  in  favor  of  the  Secretary  of  the  Treasury,  in  cases 
of  moneys  accruing  to  the  United  States  from  violations  of 
the  internal  revenue  and  direct  tax  laws,  should  be  issued  in 
triplicate,  the  duplicates  forwarded  to  the  Commissioner  of 
Internal  Revenue,  and  the  triplicates  retained  by  the  depositors. 

In  all  other  cases,  both  originals  and  duplicates  should  be 
forwarded  to  the  Secretary  of  the  Treasury,  and  the  triplicates 
retained  by  the  depositors. 

6.  Those  issued  on  account  of  patent  fees  should  be  in  trip- 
licate, the  duplicates  transmitted  to  the  Commissioner  of 
Patents,  and  the  triplicates  retained  by  the  depositors. 

7.  Those  issued  on  account  of  surveys  of  public  lands  should 
be  in  triplicate,  the  duplicates  forwarded  to  the  General  Land 
Office  direct,  or  through  the  local  land  office  or  Surveyor  Gen- 
eral's Office,  and  the  triplicates  retained  by  the  depositors. 

8.  Those  in  favor  of  receivers  of  public  moneys  on  account 
of  sales  of  public  lands,  &c. ,  should  be  issued  in  duplicate  ; 
the  duplicates  to  be  retained  by  the  depositors. 

9.  Those  issued  to  military  or  naval  officers,  either  on  ac- 
count of  repayments,  sales  of  public  property,  or  otherwise, 
should  be  in  duplicate,  and  the  duplicates  retained  by  the 
depositors. 

10.  Those  issued  on  account  of  semi-annual  duty  should  be 
in  triplicate ;  the  duplicates  transmitted  to  the  Treasurer  of 
the  United  States,  and  the  triplicates  retained  by  the  depos- 
itors. 

11.  Those  issued  to  judicial  officers,  district  attorneys, 
marshals,  clerks  of  courts,  &c. ,  should  be  in  duplicate,  and  the 
duplicates  retained  by  the  depositors. 

12.  Those  issued  on  account  of  coupons  missing  from  bonds 
forwarded  for  redemption,   or  otherwise,  should  be  in  tripli- 


201 

cate ;  the  originals  and  duplicates  forwarded  to  the  Secretary 
of  the  Treasury,  and  the  triplicates  retained  by  the  depositors. 

13.  Those  issued  on  account  of  subscriptions  to  any  loan, 
repayments  of  interest  on  the  public  debt,  civil  repayments, 
except  as  hereinbefore  otherwise  provided  for,  consular  fees, 
miscellaneous  and  other  receipts,  should  be  in  duplicate,  and 
the  duplicates  retained  by  the  depositors. 

14.  Certificates  of  deposit  are  not  required  to  be  filed  with 
accounts  rendered  by  Government  officers  to  the  accounting 
officers  of  the  Treasury  Department,  and  so  filing  them  does 
not  secure  to  such  officers  proper  credits  in  their  accounts, 
which  are  only  given  upon  warrants  issued  by  the  Secretary 
of  the  Treasury,  based  upon  the  original  certificates  of  deposit. 

In  taking  credit  in  their  accounts  current,  however,  for  de- 
posits made,  officers  should  state  specifically  the  date  of  the 
deposit,  and  the  designation  and  location  of  the  depository,  as 
well  as  the  source,  &c. 

Original  certificates  of  deposit  in  favor  of  military,  naval, 
and  other  officers,  which  are  required  to  be  recorded  in  the 
bureaus  of  other  executive  departments,  will  be  duly  for- 
warded to  the  head  of  the  department  to  which  the  deposits 
respectively  pertain  for  designation  of  the  proper  appropria- 
tion, &c. 

Regulations  for  the  Deposit  of  Public  Moneys. 
COLLECTIONS. 

Collectors  and  surveyors  of  customs,  collectors  of  internal 
revenue,  and  receivers  of  public  moneys  where  there  is  an 
Assistant  Treasurer  or  designated  depositary,  must  deposit 
their  receipts  at  the  close  of  each  day.  Officers  at  such  a 
distance  from  a  depository  that  daily  deposits  are  impractica- 
ble, must  forward  their  receipts  as  often  as  they  amount  to 
$1000,  and  at  the  end  of  each  month,  without  regard  to  the 
amount  accumulated. 

Collections  must  be  deposited  to  the  credit  of  the  Treasurer 
of  the  United  States,  except  moneys  received  by  collectors  of 
internal  revenue  from  sales  under  Section  3460,  Revised  Stat- 
utes of  the  United  States,  or  from  offers  of  compromise,  when 


202 

received  prior  to  the  acceptance  of  the  offer,  which  must  be  de- 
posited to  the  credit  of  the  Secretary  of  the  Treasury. 

District  attorneys,  marshals,  and  clerks  of  courts  who  re- 
ceive money  accruing  to  the  United  States  will  deposit  it  in 
accordance  with  the  foregoing  paragraphs,  except  money  ac- 
cruing from  customs  and  internal  revenue  cases,  which  should 
be  paid  to  the  collector  or  surveyor  of  customs,  or  collector 
of  internal  revenue  of  the  district  in  which  the  case  arose, 
and  money  accruing  from  post-office  suits,  which  should  be 
deposited  to  the  Treasurers  credit,  for  the  use  of  the  Post 
Office  Department. 

Deputy  collectors  and  agents  should  deposit  directly  with 
a  depositary  in  the  name  of  their  principals,  and  take  certifi- 
cates of  deposit  in  the  names  of  the  officers  for  whom  they  are 
acting. 

DISBURSING   FUNDS. 

All  moneys  received  by  any  Government  officer  or  agent 
from  the  Treasury  for  disbursement,  or  coming  into  his  hands, 
must  be  deposited  to  his  official  credit,  and  drawn  upon  only 
in  his  official  capacity. 

Deposits  of  such  moneys  may  be  made  with  the  Treasurer, 
an  Assistant  Treasurer,  or  any  Designated  Depositary  of  the 
U.  S.  specially  authorized  by  the  Secretary  of  the  Treasury, 
under  Section  3620,  Revised  Statutes,  and  not  otherwise. 

In  case  special  authority  has  not  been  given  to  a  convenient 
depositary,  application  should  be  made  to  the  Secretary  of  the 
Treasury  therefor. 

RECEIPTS. 

Those  given  to  district  attorneys,  marshals,  or  clerks  for 
moneys  paid  by  them  to  collectors  or  surveyors  of  customs 
should  be  sent  to  the  Solicitor  of  the  Treasury,  and  similar 
receipts  from  collectors  of  internal  revenue  should  be  sent  to 
the  Commissioner  of  Internal  Revenue. 

Those  given  to  officers,  for  deposits  of  disbursing  funds  to 
their  own  credit,  should  be  retained  by  them. 

Reference  is  made  to  Sections  3216,  3218,  3617,  3620,  3621, 
3625,  and  5481  to  5505,  inclusive,  Revised  Statutes. 


INDEX. 


A 

Paqb. 

Acknowledgment — Of  organization  certificate 7 

Assignment  of  bonds 187 

Foreign  assignment  of  bonds 187 

Adams  Express  Company — Government  contract  with 164 

Administrators  Holding  Stock  not   Personally  Liable 23 

Agent — Of  association  to  examine  bonds  annually JO 

To  witness  destruction  of  mutilated  notes 37 

Appointment  of  special,  by  Comptroller.. 16,  63 

Redemption,  selection  of. 41 

Of  insolvent  National  bank 103 

Agency — Redemption  at  Treasury 88,  167 

Aiding  or  Abetting  in  Misdemeanors 77 

Apportionment  of  Circulation  to  States  and  Territories 33 

Appraisal  of  Stock 109 

Committee  for 109 

Articles    of  Association 5,  119 

Form  of 119 

Proceedings  in  regard  to 5,  119 

Amendment  of 107,  150 

Assessment — Upon  shareholders  to  pay  deficiency  in  capital  stock 83,  104 

Of  penalty  for  failure  to  report 51 

United  States  taxes 52 

State  taxes 53 

Compensation  of  examiner 57 

Cost  of  redemption  of  circulation 89,  111,  171 

Transportation  of  notes 89,  111,  171 

Assets — Of  consolidated  bank 61 

Failed  bank,  U.  S.  to  have  paramount  lien  on 65 

How  reported 67 

Disposition  of 67 

Surplus  of,  how  treated 68,  103 

Assignment — Of  bonds  to  secure  circulation 26,  27 

Registered  bonds 184,  187 

Assets  of  association  after  insolvency  void 70 

Executed  by  Comptroller  to  be  evidence 86 

Association — (See  National  Banking  Association.) 

Attachment — Not  to  issue  from  State  court  before  final  judgment 84 

Attorney-General — Decision  of,  in  regard  to  lost  or  destroyed  coupons 17,  197 

(  203) 


204 

Page. 

Auction,  Sale  at — Of  delinquent  stock 13,  14 

Bonds 34,  62,  65 

Stock  taken  to  secure  debt 45 

Stock  taken  from  retiring  stockholders 109 

B 

Bad  Debts — Denned 47 

Bank  Check — Repeal  of  law  requiring  stamp  on 115 

Banks  in  District  op  Columbia — Must  report  to  Comptroller 105 

Comptroller  shall  examine 3 

Bill  in  Equity  to  Enforce  Stockholders'  Liability 102 

Bills  of  Exchange — Discount  of,  not  usurious 43 

Not  considered  money  borrowed 44 

Blanks  for  Organization 119 

Bonds,  Official — Of  Comptroller 2 

Deputy  Comptroller 2 

Receiver 67 

Bank  officers 128,  129,  154 

To  be  given  by  stockholders  of  failed  bank 103 

Bond,  Indemnity 195,  197 

Bonds,  U.  S. — Defined 2& 

Deposited  with  Treasurer  by  public  depositaries 23,   199 

Deposited  by  banks  commencing  and  continuing  business,  26,31,  90,  111 

How  transferred  to  Treasurer 27 

How  withdrawn  and  assigned 28,  184 

Limitation  of  amount  to  be  deposited 26,  31,  90,  111 

Coupon,  how  changed  for  registered 27,  183- 

Comptroller  to  have  access  to 29 

To  be  examined  annually  by  bank 29 

Collection  of  interest  on 29,  1891 

When  interest  may  be  withheld 47,  51,  52 

"When  strengthened  by  further  security 29 

Exchange  of 30 

Ratio  of  circulating  notes  to 31,  112 

Reassignment  of,  to  closed  association 62,  103 

When  sold  by  Comptroller 62,  65,  92 

Forfeiture  of 64 

Cancellation  of 65 

Sale  at  auction  or  private  sale 65 

Proportion  of,  to  capital 26,  111,  90- 

Regulations  of  Treasury  in  regard  to 181 

Interest  bearing,  outstanding 181 

Non-interest  bearing,  outstanding 181 

Method  of  assigning  registered 183-187 

Interest  on  registered 189-191 

Lost  registered 1  9  v 


205 

Page. 

Bonds,  U.  S. — Lost  coupon 193 

Duplicates,  how  obtained 194 

Called 197 

Burning — (See  Destruction  of  Notes.) 

Business — Usual  place  of C.  39 

Proceedings  and  requirements  before  commencing 15 

Branches — State  banks  converted  to  National  may  retain 25 

By-Laws — Effect  of. 8,  9,  21 

Form  of 127,  132 

c 

Cancellation — Of  stock 13 

Coupon  bonds 27 

Forfeited  bonds 65 

Circulating  notes 66 

Capital  Stock — Minimum 11)24,  105 

Maximum  for  gold  banks 37,  96 

Transfer  and  denomination  of  shares 12,  24 

Shares  personal  property 12 

When  paid  in 13 

Proceedings  as  to  payment 13,  124 

Of  delinquent  stockholders 14 

Must  be  kept  up  to  minimum 14 

Increase  of 16.   132,    115B 

Reduction  of 17>  133 

Amount  held  by  directors 19 

Proportion  of  bonds  to 26,  90,  111 

Creation  of  or  increase  of  by  use  of  circulating  notes  prohibited..     46 

Proportion  of  circulation  to 31,  33,  111,  112 

Proportion  of  loans  to 44 

Associations  not  to  loan  on 45 

Proportion  of  indebtedness  to 45 

Withdrawal  in  dividends  prohibited 46 

When  impaired  to  be  made  good 47 

Tax  on 52,  115 

Of  savings  banks  in  District  of  Columbia 105 

Of  converted  State  bank 24 

Cashier — Appointment  of 8 

Duties  of. 13.  16,  17.  27,  31,  36.  48,  49,  50,  51,  59,  63,  72,  107 

Oath  of. I5 

Cannot  act  a3  proxy 18 

When  may  be  examined  on  oath 57 

Cannot  be  examiner  of  own  bank 58 

Not  to  loan  money  on  United  States  or  National  bank  notes 77 

Embezzlement  by 77 

Forbidden  to  reissue  notes  of  closed  bank 81 

Cavxat — For  lost  bonds,  form  of. I93 


206 

Page. 

Certificate — Of  approval  of  Comptroller's  seal  by  Secretary  of  Treasury 3 

Officers  and  directors  to  payment  of  capital  stock 15,  123 

Installments  of  capital  stock 13,  124 

Comptroller  approving  increase  of  capital 16 

Reduction  of  capital 18 

Agent  of  association  of  examination  of  bonds 29 

Destruction  of  notes 37,  62,  66 

Authority  to  commence  business 15 

Extension  of  corporate  existence 108 

Amendment  to  articles  of  association 107,  150 

(See  also  Organization  Certificate.) — Executed  and  sealed 

by  Comptroller  to  be  evidence 86 

Clearing-house 41 

Gold  and  silver 113,  161 

Of  deposit  of  United  States  notes 41,  71 

Increase  of  capital  by  bank 16,  132 

Reduction  of  capital  by  bank 17,  133 

Deposits  of  public  money 199 

Certification  of  Checks — When  forbidden 48,  114 

Penalty  for 48,  114 

Certified  Copies  of  Papers  Evidence 87 

Charter  Number  of  Association — To  be  printed  on  notes 91 

Circulars  of  Comptroller's  Office — Synopsis  of. 136 

Circulating  Notes — Of  National  banks  to  be  taken  by  depositaries 23 

Converted  State  bank  with  branches 25 

Ratio  of,  to  bonds  deposited 31,  33,  112 

Bonds  deposited  as  security  for 26,  27,  28,  29,  90,  111 

Ratio  of,  to  capital 31,  112 

How  retired  and  bonds  withdrawn 30,  34,  60,  61,  62, 

90,  112,  135 

Form,  denominations  and  printing  of. 31,  89,  109 

Tax  on 51,  52,  178 

Limitation  on,  is  of  denominations  less  than  five  dollars...     33 

No  limit  on  aggregate  amount 94 

How  signed 32 

Payable  on  demand 32 

For  what  receivable 35 

Issue  of  other  notes  than  prohibited 36 

Destruction  and  replacement  of  mutilated 37 

Redemption  of  mutilated 167 

Banks  must  redeem  at  own  counters 89 

Penalty  for  issuing  imitations  of 78 

Penalties  for  counterfeiting,  &c 78,  79 

Lawful  money  reserve  on,  abolished 88 

Use  of,  to  pay  in  capital  stock  forbidden 46 

Depreciated  or  uncurrent,  not  to  be  paid  out 48 

Of  closed  banks  to  be  retired 60,  65 

Consolidating  banks 61 


2o; 

Paqi. 

Circulating  Notes — Mode  of  protesting  for  non-payment 63 

Five  per  cent,  redemption  fund 88,  1G8 

Redemption  of.  by  Treasurer;  regulations  concerning 167 

Treatment  of  mutilated,  in  office  of  Comptroller 17  J 

To  be  sent  to  Treasurer  by  Assistant  Treasurers  and  De- 
positaries      89 

Destruction  of,  of  extended  associations 110 

Gain  from  lost  and  destroyed 110 

New  designs  of,  for  extended  associations 109 

Cost  of  plates  for  printing,  hew  paid 32,  89,  110,  119 

Cost  of  redemption,  how  paid 89,  111 

Cost  of  transportation 89,  111 

Cities — Where  reserve  may  be  kept 39 

Claims — Against  insolvent  banks 67 

For  lost  bonds  or  coupons 194,  195 

Clearing  House  Certificates 41,  113 

Closed  Associations — In  voluntary  liquidation 59,  133 

By  failure 66 

By  expiration  of  corporate  existence 110,  156 

Commercial  Paper — Discount  of,  not  deemed  borrowed  money 44 

Comptroller  op  Currency — Appointment,  term  of  office,  and  salary  of. 1 

Bond,  oath,  and  office  of 2 

Must  not  be  interested  in  National  bank 2 

Seal  and  annual  report  of. 3 

When  maybe  enjoined 68 

Duties  of,  in  regard  to  transfer  and  assignment  of 

bonds 27,  28,  29 

Issue  of  certificate  of  authority  to  commence  busi- 
ness by 15 

Duties  connected  with  circulating  notes,  29,  30, 

31,  32,  33,  34,  35,  89,  93,  94,  95,  112 

To  approve  increase  of  capital 16 

Approve  reduction  of  capital 18 

Appoint  special  commissioners 16,63 

Appoint  examiners 57 

Appoint  witness  of  destruction  of  notes 37 

Appoint  receivers...   14,  22,  40,  41,  48,  49,  67,  101 

Approve  reserve  agents 42 

Call  for  reports 50 

Demand  more  security  for  circulating  notes...     30 

Forfeit,  cancel,  or  sell  bonds 64.  65 

Give  notice  to  creditors  of  insolvent  banks  ...     67 

Give  power  of  attorney  to  receive  interest 29 

Have  access  to  Treasurer's  books  and  to  bonds.     29 

Have  control  and  direction  of  plates 132 

Pay  dividends  to  creditors  of  insolvent  banks.     67 
Pay  residue  of  assets  to  shareholders 69,  103 


208 

Page. 

Comptrollbr  of  Currency — To  notify  banks  deficient  in  reserve 40 

Receive  and  destroy  mutilated  notes 37 

Call  meeting  of  stockholders  of  insolvent  Na- 
tional banks 103 

Grant  extension  of  corporate  existence 108 

Cause  special  examination  to  be  made 108 

Make  re-appraisal  of  value  of  stock 109 

May  enforce  liability  of  stockholders 22,  67 

Take  bond  from  stockholders 103 

Computation  of  Reserve 137-144 

Conversion  of  State  Banks 24 

Information  in  regard  to 124 

Conversion  of  Private  Banks • 125 

Corporate  Existence — Extension  of 107,  150 

Corporate  Rights  and  Powers 7 

Cost  of  Plates  to  Banks 11!' 

Counterfeiting 78,  79,  80 

Coupons — Lost,  defaced,  or  detached 197,  198 

Coupon  Bonds — May  be  changed  to  registered 183 

Lost 193 

Courts — Jurisdiction  of 84 

Creditors  of  Association — Holders  of  notes  only  preferred 65 

D 

Deficiency — In  reserve 40 

Capital  stock .'. 14,  47,  104 

Proceeds  of  bonds  to  pay  circulating  notes 65 

Security  for  circulation 29 

Definition — Of  National  banking  associations 26 

United  States  bonds 26 

Lawful  money  as  applied  to  gold  banks 38 

Bad  debts 47 

Obligations  of  United  States 78 

Denominations — Of  notes  prescribed 32,  33 

Notes  of  gold  banks 37 

United  States  certificates  of  deposit 41 

Gold  certificates 113 

Depositaries  of  Public  Money — Regulations  concerning 23,  199 

Information  in  regard  to 199 

Duties  of. 23 

Deposits — Reserve  to  be  kept  on 39,  40,  140,  142 

Tax  on 51,  115 

Of  public  money  receipts  for 202 

Public  money,  how  made 201 

Deputy  Comptroller — Appointment  and  duties  of. 2 

Destruction  of  Mutilated  Notes — Of  banks  doing  business 37 

Banks  in  liquidation 62 


209 

Paok. 

Destruction  of  Mutilated  Notes — Of  notes  redeemed  by  Treasurer 6'.* 

Notes  retired  by  deposit  of  lawful  money     93 

Failed  banks 62 

Extended  banks L10 

Maceration  substituted  lor  burning 94 

Destroyed  and  Defaced   Bonds  axd  Coupons 1U4,  198 

Directors — Election  and  appointment  of 19,  20 

Qualifications  and  duties  of 19 

Oath  of,  and  proceedings  in  regard  thereto 20,  122 

Liability  for  violations  of  law 09 

Penalty  for  embezzlement  by 77 

President  must  be  a 21 

Of  closed  bank  forbidden  to  reissue  notes.  &c 81 

State  banks'  duties  in  conversion 24 

Form  of  oath  of 122 

Of  proxy  for  election  of 122 

Duties  of,  connected  with  impaired  capital 13.  47,  104 

Resolution  of,  for  assignment  of  registered  bonds 186,  187 

District  Attorneys — To  conduct  suits 84 

District  of  Columbia — Banks  in.  to  be  examined  by  the  Comptroller :; 

Savings  banks  in 105 

Disbursing  Funds — How  to  be  deposited 202 

Dividends — When  disclosed 44 

When  forbidden 40.  40 

Limitation  on 4G 

Reports  of 50,  146 

Duplicates — Of  lost  or  destroyed  bonds 194,  195 

E 

Earnings,  Net — Must  be  reported 50 

What  constitutes 44,  47 

Election  of  Directors 8,  18,  19,  20,  21 

Proceedings  at  meetings  for 18,  122 

Failure  to  hold 21 

Form  of  proxy  for  use  in 122 

Embezzlement — Penalties  for 7  7 

Evidence — Of  payment  of  notes  of  closed  banks 66 

Copies  of  papers  certified  by  Comptroller  to  be 86 

Certified  copy  of  organization  certificate  to  be  evidence  of  existence 

of  bank 87 

Required  to  obtain  duplicate  for  lost  or  destroyed  bond  or  interest...    195 

'Execution — Of  powers  of  attorney  for  assignment  of  bonds 188 

Powers  of  substitution 188 

Power  of  attorney  to  collect  interest 190 

Reports  of  condition 50.  106 

Amendment  extending  corporate  existence 150 

15 


2IO 

Paob. 
Execution— Of  organization  papers 119 

Not  to  issue  from  State  court  before  final 

judgment 84 

Examination — Of  associations  before  granting  authority  to  commence  business..     15 

Bonds  deposited  by  association 29 

Plates  and  dies  by  Comptroller 32 

Association  by  bank  examiner 57 

Expense  of,  to  be  paid  by  association 57 

Special  for  extension  of  corporate  existence 108,  153 

Examiners — Appointment,  powers,  duties,  and  pay  of. 57 

Special 16,  03,  108 

Exchange  of  Bonds 27,  30,  183 

Executors  holding  Stock 23,104 

Expenses — Of  special  examination _ 108 

Examinations 57 

Reappraisal  of  stock 109 

Redemption  of  notes  retired  by  deposit  of  lawful  money 89,  111 

Transportation  of  notes Ill,  89 

Examination  of  banks  in  District  of  Columbia 3 

The  Bureau  of  Currency 32 

Plates  and  dies 32,  89,  110,  119 

Destroying  plates  and  dies  of  closed  bank 33 

Sale  of  bonds  of  closed  bank 65 

Receivership 65 

Expiring  Associations — Proceedings  by,  required 110,  156 

Extending  Associations — Proceedings  to  extend 107,  150 

Circulating  notes  of 109,  115 

Succession  of,  for  twenty  years 107 

Rights  and  privileges 108 

Liabilities  and  restrictions  on 108 

Continue  identical  associations 108 

Extension  of  Corporate  Existence 107,  150 

F 

Fee — For  protest  of  notes 63 

None  for  witnessing  assignment  of  bonds   by  United   States   Minister, 

Charge,  Consul,  &c 189 

Fine — For  certifying  checks  unlawfully 114 

For  various  crimes  and  misdemeanors 77,  78,  79,  80 

Forfeitures 43,  64,  69 

Suits  for 69,  84 

Of  franchise,  how  determined 69 

Forms — Of  articles  of  association 119 

Organization  certificate 121 

Oath  of  directors 122 

Proxies 122,  124 


211 

Paok. 

Forms — Of  certificate  of  officers  and  directors 125 

Payment  of  installment  of  capital  stock 123 

By-laws UT 

Certificate  of  increase  of  capital 132. 

Certificate  of  reduction  of  capital 133 

Certificate  of  liquidation 134 

Power  of  attorney  for  withdrawal  of  bonds 135- 

Notice  of  changes  of  officers ]■!:» 

Amendment  extending  corporate  existence ]  50 

Request  for  extension ].",] 

Notice  of  expiration  of  charter 156- 

Letter  requesting  conversion  of  coupon  bonds 183 

Power  of  attorney  for  assignment  of  bonds 186- 

Resolution  of  directors  authorizing  assignment  of  bonds 186,  187 

Letter  transmitting  bonds 183 

Power  of  attorney  to  collect  interest  on  bonds 190 

Resolution  of  directors  authorizing  collection  of  interest 191 

Caveat  for  lost  bond 193 

Affidavit  for  lost  bond 196 

Fraudulent  Notes — To  be  stamped 104 

Fractional  Currency — Redemption  of 161 

Fractional  Silver  Coin — Issue  of 160> 

Purchase  of  mutilated 175 

G 

Gold  Banks — Law  and  regulations  in  regard  to 37,  33 

Conversion  of 106 

Gold  Certificates — Issue  and  denominations  of 113 

Counted  as  reserve 113 

When  issue  suspended 114 

Guardians — Liability  as  stockholders 23,  104 

Government  Contract — For  transportation 164 

H 

Hand-bills — In  imitation  of  bank  notes  prohibited 38 

Hypothecation — Of  circulating  notes  unlawful 46- 

I 

Impairment  of  Capital — To  be  made  good 14,47,  104 

Incidental  Powers — Of  associations 9> 

Incomplete  Currency — How  treated 171 

Unlawfully  delivering 76 

Increase  of  Capital  Stock — How  made 16,  132 

Increase  of  Security  for  Circulation — When  to  be  deposited 30> 

Indebtedness  to  Bank — For  money  borrowed 44 

Of  association,  limit  on 45 

Indorsement — Of  Treasury  drafts  and  Post-Office  Department  warrants 176 


212 

Page. 

Injunction — Not  to  issue  against  National  bank  before  final  judgment 84 

Of  Comptroller  by  bank 68 

Insolvent  Banks — Agent  of  stockholders  of 103 

Insolvency — Appointment  of  receiver  for 101 

Acts  and  proceedings  in  contemplation  of,  void 70 

Installments  of  Capital  Stock — Payment  of,  how  certified  to  Comptroller..   13,  124 

Interest — On  bonds  deposited,  how  collected  by  association 29 

Public  debt  not  payable  in  National  bank  notes 36 

Legal  rate  for  National  banks 43 

Penalty  for  taking  usurious 43 

When  withheld  on  bonds  deposited  to  secure  circulation 47,  51,  52 

On  registered  bonds 180 

Form  of  power  of  attorney  to  collect 190 

Checks  for,  how  indorsed 190 

How  paid  to  joint  holders  of  registered  bonds 191 

Standing  in  name  of  minors 191 

Unclaimed 192 

Issue —  Of  U.  S.  notes,  gold  coin,  and  standard  silver  dollars 159 

Fractional  silver  coin 160 

Duplicates  for  lost  bonds 194 


Judgment — Must  be  final  in  State  court  before  certain  proceedings 84 

Purchase  of  real  estate  under 10 

Jurisdiction  op  Courts 83 


Lawful  Money — When  and  how  to  be  deposited 30,  60,  90,  109,  111 

Limit  on  aggregate  amount  to  be  deposited  in  any  one  month..  112 

Lawful  Money  Reserve — Amount  of. 39 

How  to  compute 140-144 

Abolished  on  circulating  notes 88 

Agents  with  whom  may  be  held 40,  42 

Five  per  cent,  redemption  fund  to  count  as 88 

Liability — Individual  liability  of 22 

How  enforced 67,   102 

Limitation — Of  capital  of  banks 11,  24,  105 

Bonds  to  be  kept  on  deposit 27,  90,   111 

Circulating  notes  in  proportion  to  capital 31,  33,  111,   112 

Circulating  notes  in  proportion  to  bonds 31,  112 

On  increase  of  capital  stock 16,  17 

Of  reduction  of  capital  stock 18 

On  taking  real  estate 10 

Of  issue  of  notes  less  than  $5 33 

Legal  rate  of  interest 42 

Right  of  action  for  usury 43 


213 

Page- 
Limitation — Of  liabilities  of  association 44.  45 

Dividends 40,  4T 

Visitorial  powers 58 

Aggregate  of  circulation 33,  95 

Lawful  monej-  deposit 112 

Reissue  of  notes  retired  by  lawful  money  deposit 112 

Time  for  deposit  of  lawful  money GO,   110 

Liquidation — Voluntary 59,  133 

Of  failed  bank CG.  GT.  101-103 

List — Of  shareholders , 49 

Loans — Limit  on 44.  45 

When   forbidden 10,  39,  45 

Location — Change   of 1 15  B 

Lost  or  Destroyed  Notes — How  replaced 36 

Profit  on  to  inure  to  Government 110 

Lost,  Defaced,  or  Destroyed  Bonds 193,  194 

Form  of  affidavit  to  recover 196 

Indemnity  bond  to  be  given 197 

Lost.  Defaced,  or  Destroyed  Coupons 198 

M 

Maceration — Destruction  of  notes  by 94 

Maximum — Of  monthly  deposit  of  lawful  money 112 

Increase  of  capital 16 

Circulation  to  bonds  and  capital 27.  31.  33,  90,  111.   112 

Legal  rate  of  interest 42 

Aggregate  circulation 33,  95 

Lawful  money  with  reserve  agents 40,  41 

Meeting  of  Stockholders — Annual,  for  election  of  directors 19,  21 

Of  closed  bank  to  elect  agent 103 

Minimum — Of  capital  stock 11,  24,  105 

Capital  of  converted  State  bank 24 

Bonds  to  be  deposited 27,  90,  111 

Minors — Bonds  standing  in  name  of,  interest  on,  how  paid 191 

Minor  Coins — Purchase,  exchange,  and  redemption  of. 173,  174 

Misdemeanors,  Crimes,  &c 77,  82 

Money — Uncurrent.  not  to  be  paid  out 48 

Borrowed  by  association,  limit  of. 44 

Mortgage — Real  estate,  how  taken  and  held 10 

Mutilated  Notes — How  replaced 36 

How  destroyed 36,  62,  66 

Process  of  destruction  of. 94,  167,  172 

Redemption  of  fragments  of. 162 

Mutilated  Silver  Coin — Purchase  of 175 

Name  of  Association — Must  be  approved  by  tin-  Comptroller 13,   116 

Change  of. 115  B 

National — As  part  of  title,  limited  to  National  banks 58 


214 

Pa<m. 

National  Bank  Notes — (Sec  Circulating  Notes.) 

National  Banking  Associations — Defined 26 

Organization  of...  5.  6,  24.  103,  116,  1 IV,  118-123 

Powers    of 7,  8,  9 

Liability  of  to  State 115  D 

Bonds  deposited  by 2V,   90,    111 

Capital  of. 11,  24,  105 

Circulating  notes  of. 25,  31,  33,  111,  112 

Lawful  money  reserve  of. 39,  140,  88,  40,  42 

May  liquidate 59 

Extend  corporate  existence 107,  150 

Increase  capital 16,  132 

Reduce  capital 17,  133 

Retire  circulation 30,  90,  110,  111 

Withdraw  and  exchange  bonds  30,  27,  90,  112 

Declare  dividends 44 

Amend  articles  of  association 5 

As  U.  S.  depositaries 199 

Non-rbsidbnt  Stockholders — Taxation  of  shares  of. 53 

Notary  Public — Acknowledgments  before 7,  20,  50,  106 

Protest  of  circulating  notes  by 63 

Notes — (See  Circulating  Notes.) 

Notice — By  advertisement  of  sale  of  stock  of  delinquent  stockholder 14 

Of  payments  of  installments  of  capital 14 

Payment  of  increase  of  capital 16 

Reduction  of  capital 17 

Liquidation 59 

Protest  of  circulating  notes 63 

Deferred  election  of  directors 21 

To  creditors  of  bank  in  hands  of  receiver. 67 

Of  transfer  of  bonds  on  deposit 28 

To  make  good  reserve 40 

Make  good  capital 47,  104 

Association  under  protest  of  appointment  of  special  examiner 63 

Same  of  sale  of  its  bonds 64 

Holders  of  notes  of  banks  under  protest 65 

Of  stockholders'  meeting 21 

Sale  of  delinquent  stock 14 

Sale  of  appraised  stock 109 

Changes  of  officers 149 

To  Comptroller  of  expiration  of  charter 156 

Number — Charter,  to  be  printed  on  notes 91 

o 

Oath — Of  Comptroller  and  Deputy  Comptroller 2 

Signers  of  organization  certificate 6,  121 

President  or  cashier 13,  49,  50,  51,  72,  107 

Officers  and  directors  to  payment  of  capital 15 


215 

Paqk. 

Oath — Of  directors 20.  122 

Before  whom  to  be  taken 106 

Obligations  of  United  States — Denned 78 

Officers  of  Association — How  appointed 8 

Cannot  act  as  proxies 18 

To  examine  bonds  with  Treasurer 29 

When  not  to  certify  checks 48,  114 

May  be  examined  under  oath  by  bank  examiners...  57 

Cannot  act  as  examiners  of  own  bank 57 

Not  to  loan  on  U.  S.  or  National  bank  notes 77 

Penalties  for  embezzlement  by 77 

Forbidden  to  issue  notes  of  closed  associations 81 

Other   than   designated    depositaries    forbidden   to 

receive  public  moneys 82 

Must  stamp  counterfeit  notes 1 04 

Bonds  of 154 

Officers  of  Government — Must  not  countersign  or  deliver  notes  unlawfully...  76 

Organization  Certificate — Description  of 6 

Form  of 121 

Proceedings  in  reference  to 7 

Certified  copy  of  evidence  of  existence  of  bank 87 

Organization — Of  new  bank  to  take  place  of  old 154.  155 

P 

Payment  to  Government 167 

Payment  of  Capital  Stock 14,  123 

Penalty — Suit  for,  to  be  brought  in  U.  S.  Court 84 

For  certifying  checks  unlawfully 48,  114 

Mutilating  notes  and  drafts 38 

Taking  usurious  interest 43 

Failure  to  make  reports 51,  52 

Unlawful  use  of  word  "National" 58 

Violation  of  law  by  directors 69 

Failure  to  report  State  bank  notes  paid  out 73 

Unlawfully  delivering  circulating  notes 76 

Loaning  money  on  U.  S.  or  National  bank  notes 77 

Embezzlement 7  7 

Counterfeiting.  &c 78-81 

Officers  issuing  notes.  &c,  of  closed  banks 81 

Other  than  designated  depositary  receiving  public  moneys 

Deficiency  in  lawful  money  reserve 40 

Failure  to  redeem  circulatiug  notes •  - 

Insolvency 101 

Place  of  Business — To  appear  in  organization  certificate 6,121 

Circulating  notes  payable  on  demand  at 

Plates  and  Dies — Deposited  with  Comptroller 3 

To  be  procured  by  Comptroller 3J 


2l6 

Page. 

Plates  and  Dies — Expense  of 32,89,  110,  119 

To  be  annually  examined 32 

Of  closed  associations  to  be  destroyed 33 

Post  Notes — To  circulate  as  money  forbidden 36- 

Powers  of  Attorney — To  withdraw  bonds 135 

Amend  articles  of  association  to  extend  charter 152 

For  assignment  of  bonds 18& 

Substitution 188 

Appointment  of  agent 29,  3d 

To  collect  interest  on  U.  S.  bonds 190,  191 

In  foreign  language  must  be  translated 192 

See  also  Proxy. 

Powers — Of  National  banks 7 

Associations  organized  or  initiated  on  or  before  June  3,  18G4 25 

Converted  bank 24 

New  associations 93 

Converted  gold  banks 10& 

Extended  banks 108 

Expiring  banks 110 

Preferred  Creditors — Holders  of  notes  only 10 

President — How  chosen 21 

To  be  a  director 21 

Duties  of 13.  16,  IT,  27,  32,  3(3,  49.  50,  51,  59,  63 

Cannot  act  as  proxy 18 

Unlawful  certification  of  checks  by 48,  114 

May  be  examined  under  oath  by  National  bank  examiner 57 

Embezzlement  by 77 

Private  Sale — Of  stock  taken  for  debt 45 

Bonds  of  bank  in  receiver's  hands 65 

Bonds  when  liquidating  bank  fails  to  protect  its  circulation.  62 

Profits,  Net — Disposition  of,  in  dividends  and  surplus 44 

Semi-annual  report  of,  to  Comptroller 50' 

Proportion  of  Circulating  Notes  to  Bonds  and  Capital — (See  Circulating 
Notes.) 

Protest  of  Circulating  Notes — When  and  how  made 63 

Acts  and  proceedings  subsequent  to.  63,  64,  65,  66- 

Comptroller  may  be  enjoined  after 68 

Proxy — At  stockholders'  meetings 18 

Officers  cannot  act  as 18  ' 

Form  of,  for  use  in  election  of  directors 122 

For  use  in  extending  bank 152 

Public  Debt — Interest  on,  not  payable  in  National  banknotes 36- 

Amount  of  U.  S.  notes  outstanding  to  appear  in  statement  of...  91 

Bonded,  as  it  stood  March  15,  1886 181 

Publication — Of  sale  of  stock  of  delinquent  stockholder 14 

Certificate  of  authority  to  commence  business 16- 

Notice  of  deferred  stockholders'  meeting 21 


217 

Page. 

Publication — Of  reports  of  condition 50,  145 

Notice  to  creditors  by  closed  associations 5!) 

Notice  to  creditors  of  failed  associations 67 

Sale  of  delinquent  stock 104 

Notice  to  creditors  of  expiring  associations 110 

Comptroller's  certificate  of  extension  of  corporate  existence...   108 
Public  Moneys — Must  not  be  received  by  banks  other  than  designated  deposi- 
taries      82 

Regulations  in  regard  to 201,  202 

Purchase — Of  real  estate  by  association 10 

Shares  of  own  stock  by  association 45 

Mutilated  silver  coins 175 

Minor  coins 173 

R 

Rate  of  Interest — (See  Interest.) 

Ratio  of  Circulating  Notes — (See  Circulating  Notes.) 

Real  Estate — How,  may  be  taken  and  held 10 

Taxation  of,  by  State  or  local  authority 53 

Reassignment  of  Bonds 26,  29,  62,  90 

Receipt  by  Comptroller  for  Bonds   Deposited 27 

Receiver — Appointment  and  duties  of..  20,  22,  40,  42,  45,  47,  48,  66,   101,   115  A 

May  be  enjoined OS,  83,  84 

Expenses  of. 69 

Redemption — Of  mutilated  notes  by  Comptroller 145 

Agencies 41,88,  167 

At  own  counter 42,  89 

Of  notes  of  closed  bank  by  Treasurer C2,  G5 

Notes  generally  by  Treasurer 88,  89,  167 

Notes  of  failed  bank 65 

Notes  of  extended  associations 109 

Five  per  cent,  fund 88 

Legal  tender  notes 95 

Notes  of  banks  in  liquidation 62 

Cities,  list  of. 39,  40 

Redistribution  of  Circulation 34,  93 

Reduction — Of  capital  stock,  (see  Capital  Stock;)  of  bonds,  (see  Bonds;)  of 

U.  S.  notes 95 

Refunding — Of  excessive  tax  paid  on  circulation,  deposits,  and  capital 52 

Register — Of  bonds  transferred 28 

The  Treasury,  signature  on  notes !l 

Registered  Bonds — May  be  exchanged  for  coupon 27 

Information  about 183 

Assignment  of. 184,  185,  186,  187 

Execution  of  powers  of  attorney  for  assignment  of 188 

Transmission  of,  to  Treasury 188 


2l8 

Page. 

Rbgistebed  Bonds — Closing  of  transfer  books  of. 190 

Collection  of  interest  on 29,  189,  191 

Unclaimed  interest  on 192 

Lost,  and  form  of  caveat  for 193 

Destroyed  or  defaced 194,  195 

Form  of  affidavit  for  lost 197 

Reimbursement  op  Government  Expenses  by  Banks 89.  Ill,  110 

Repeal — Of  reserve  on  circulation 88 

Redemption  agents * 89 

Requirements  as  to  aggregate  circulation 91,  95 

Charge  for  conversion  of  gold  bullion  into  coin 94 

Limit  on  circulation  of  any  bank 96,  112 

Report  of  Comptroller  to  Congress 3 

Reports — Of  names  of  shareholders 49 

Condition  of  bank 50,  136 

Dividends  and  earnings 50.  14G 

Circulation  for  taxation 51.  17;? 

Bank  examiner 57 

Receiver 67 

Circulating  notes  of  State  banks  paid  out 72,  97 

Reserve — U.  S.  notes  not  to  be  held  or  used  as,  by  Secretary  of  Treasury 91 

Reserve  of  Lawful  Money — Provisions  in  regard  to 38,  39 

Of  city  banks 39,  115D 

Country  banks 39.   115C 

What  may  count  as 40.   113.   140 

Five  per  cent,  redemption  fund  may  count  as 83 

Computation  of. 140.  144 

Rights — Of  creditors  not  to  be  impaired  by  association 12 

Banks  organized  before  June  3d,  1864 25 

Converted  State  bank , 24 

Association,  how  forfeited  (see  also  Receivers) 69 

New  associations 93 

Extended  associations 108 

Stockholders  of  expiring  associations  (see  also  Powers) 109 

s 

Sale — Of  stock  of  delinquent  shareholders 14,  104 

Stock  taken  for  debt 45 

Bonds  of  closed  bank 62 

Failed  bank 65 

Assets  of  failed  bank 67 

Bonds  for  failure  to  retire  circulation t 92 

Appraised  stock  of  extended  associations 109 

Savings   Banks  in  District  of  Columbia 105 

Seal — Of  association '. 7,  9 

Comptroller's  office 3 

Effect  of  Comptroller's 87 


219 

Page. 

Secretary  of  Treasury — Duties  of.  in  connection  with  National  banking  laws.   1,  2, 

3,  12,  23,  27,  20,  31,  32,  33,  34,  35,  3G,  40,  41,  57,  G5,  66, 
72,  77,  91,  94,  95,  110,  113 

Securities  op  United  States  Defined 78 

See  Bonds. 

Shareholders — Rights  and  liabilities  of 12 

Delinquent 14 

.May  reduce  capital 17 

Regulate  increase  of  capital  in  articles  of  association...   16,  17 

Votes  of  in  elections  and  meetings 18,  19 

Proxies  of. 18.  122 

Elect  directors 19 

May  fix  day  for  election  of  directors 21 

List  of. 49 

How  taxed  by  State  authority 53—57 

May  liquidate  association 59 

When  discharged  from  liability  on  circulating  notes 62 

Individual  liability  of,  how  enforce  1 12,  67,  102 

May  hold  directors  responsible 69 

Extend  corporate  existence 107 

Form  of  consent  of,  to  extend  corporate  existence 152 

Not  assenting  to  extension  of  corporate  existence,  rights  of 109 

"When  entitled  to  preference 109 

How  compelled  to  make  good  capital 14,  47.  104 

Shares  of  Stock — Par  value  of. 12.  24 

Transfer  of 12 

To  be  deemed  personal  property 12 

Each  director  must  own  ten 28 

Loans  on.  forbidden 45 

Taxation  of,  by  State  authority 53-57 

Appraisal  of.  of  stockholders  declining  to  extend  association.  109 

Signatures  on  Circulating  Notes 32,  36 

.Silver  Certificates — Provisions  in  regard  to 113 

Issue  and  redemption  of 161 

Silver  Coins — Issued  in  exchange  for  fractional  currency 94 

Issue  of,  by  Treasury 160 

Redemption  of 163 

Solicitor  of  Treasury — Duties  of,  under  Act 84 

Special  Agent — To  examine  bank 63 

Special  Commission — To  examine  bank 15 

Special  Reports  of  Condition 50 

Special  Examination   for  Extension 108 

Special  Surplus  Fund 22 

Specie   Payments,  Resumption  of 95 

National  bank  notes  below  $5  forbidden  after.     33 

Stamps — Provisions  requiring,  on  checks  repealed 115 

State  Banks — Statistics  of,  required 4 


220 

Page. 

State  Banks — Having  $5,000,000  capital  converted  to  National  banks 22 

Conversion  of 24.  2.". 

Shares  of  stock,  par  value  after  conversion 24 

May  hold  stock  in  other  banks 24 

Capital  of 24 

Branches  of 25 

State  Courts — (See  Jurisdiction  of  Courts.) 

State  Taxation — Of  associations 53-57 

Succession,  Period  of 7 

May  be  extended 107 

Extension  of 107,  150 

Suits — (See  Jurisdiction.) 

Surplus  Fund — Net  profits  to  be  carried  to 44 

Premiums  to  be  charged  to 145 

Surrender  of  Bonds — (See  Bonds.) 

Synopsis  of  Circulars 136 

T 

Tax — On  notes  of  any  person  or  State  bank  paid  out 72 

On  notes  of  any  firm,  corporation,  town,  or  city 72 

How  preceding  are  assessed  and  collected 72,  73 

On  circulating  notes  of  National  banks 51,  52 

Repeal  of,  on  deposits  and  capital 105,  115 

Abatement  of.  on  circulation  of  insolvent  banks 105 

Excess  of,  to  be  refunded 52 

State,  of  National  bank  shares 53-57 

Teller — Cannot  act  as  proxy 18 

Embezzlement  by 77 

Three  Per  Cent.  Bonds — Issue  of. 113 

Order  of  redemption  of 113 

Transfer  of  Shares — How  made 12 

Of  assets  of  bank  after  insolvency 70 

Assets  to  agent  of  stockholders 102 

Transfer  of  Bonds — How  made 27 

To  be  made  before  any  sale  of  is  complete 65 

Treasurer  of  United  States — Duties  of,  in  connection  with  National  banking 

laws.  23,  26,  27,  28,  29,  32,  36,  37,  47,  51,  52,  60,  62,  64,  66,  88,  90,  92,  110,  111.  113 

Trustees — Holding  stock  not  personally  liable 23 

Of  closed  bank  forbidden  to  reissue  its  notes 81 

Trust  Companies — In  District  of  Columbia,  must  make  reports 105 

u 

Uncurrent  Money — Association  not  to  pay  out 48 

United  States  Disbursing  Officers — To  stamp  counterfeit  notes 104 

United  States  Notes — May  be  received  on  deposit  by  Secretary  of  Treasury...  40 

Certificates  issued  therefor 41 


221 

Page. 

United  States  Notes — Deposit  of  with  Treasurer  by  liquidating  bank 60 

By  bank  retiring  circulation.  90 
On  account  of  failed  bank... 

Usury — Provisions  in  regard  to 43 


Vacancy — Tn  board  of  directors 20 

Verification — Of  statements  to  Comptroller...   13,  15,  49,  50.  51,  106,  121,  123. 

124,  133.   135 

Vice-President  of  Bank 18,  31,  36 

Visitorial  Powers — What  association  shall  be  subject  to 58 

Votes  of  Shareholders 18,  19,  24,  59,  107,  124,  150,  152 

w 

Withdrawal  of  Bonds 26,29,62,90,   112 

Withdrawal  of  Circulation 30,  60,  90,  110,  111,   112 

Withdrawal  of  Capital — Prohibited 46 

See  Reduction  of  Capital. 


222 


INDEX  OF  SECTIONS  OF  REVISED  STATUTES 

AND   ADDITIONAL   ACTS. 


Section  of  U.  S. 

Rev.  Stats.  Par.  Page. 

324  Creation  of  Bureau  of  Comptroller  of  Currency 1  1 

325  Appointment  and  salary  of  Comptroller  of  Currency 2  1 

326  Oath  and  bond  of  Comptroller 3  2 

327  Deputy  Comptroller — duties,  &c 4  2 

328  Clerks  of  Comptroller's  office 5  2 

329  Comptroller  and  Deputy  cannot  be  interested  in  National  banks  6  2 

330  Seal  of  Comptroller's  office 7  3 

331  Rooms,  vaults,  &c,  of  Comptroller's  office 8  3 

332  Examination  of  banks  in  District  of  Columbia 9  3 

333  Annual  report  of  Comptroller 10  3 

380     United  States  attorney  to  conduct  suits 153  83 

663  National  bank  suits  within  jurisdiction  of  U.  S.  District  Courts  147  83 
629  National  bank  suits  jurisdiction  of  Circuit  Court,  suits  to  en- 
join Comptroller 148  83 

711  Exclusive  jurisdiction  of  U.  S.  courts  in  suits  for  penalties,  &c.  149  83 

736     Proceedings  to  enjoin  Comptroller,  •where  had 152  84 

884  Instruments  certified  by  Comptroller  may  be  evidence 154  86 

885  Certified  copies  of  organization  certificate  evidence 155  87 

3410  Tax  on  capital  of  State  bank  converted  to  National 120  71 

3411  Circulationj  when  exempted  from  tax 121  71 

3412  Tax  on  notes  of  State  banks,  &c 122  72 

3413  Tax  on  notes  of  cities,  &c 123  72 

3414  Monthly  returns  of  notes  of  State  banks,  cities,  &c,  paid  out..  124  72 

3415  Action  of  Commissioner  of  Internal  Revenue  in  default  of  tax 

return 125  73 

3416  Tax  return  of  converted  State  bank 126  73 

3417  Provisions  of  tax  in  foregoing  sections  not  to  apply  to  Na- 

tional banks 127  73 

3418  Tax  on  bank  checks 129  74 

3420  Official  check  exempt  from  tax 130  75 

3421  Unstamped  checks  not  evidence 131  75 

3422  Penalty  for  unstamped  checks,  how  made  valid 132  75 

3423  Stamps  to  be  cancelled ;  penalty  for  fraudulent  use 133  76 

3424  Method  of  cancelling  stamps 134  76 

3701     U.  S.  securities  exempt  from  local  taxation 128  74 

3811     When  Comptroller's  report  may  be  printed 11  4 

5133  Formation  of  National  banking  associations 12  5 

5134  Organization  certificate 13  6 

5135  Acknowledgment  of  organization  certificate 14  7 

5136  Corporate  powers  of  associations 15  7 

5137  Limitations  as  to  real  estate  and  mortgages 16  10 


223 

Section  of  U.  S. 

Rev.  Stats.  Par.  Page. 

513S     Minimum  capital  required 17  11 

5139  Stockholders'  rights  and  liabilities 18  12 

5140  When  capital  stock  must  be  paid  in 19  13 

5141  Failure  to  pay  installments  on  stock,  <kc 20  13 

5142  Increase  of  capital  stock 24  16 

5143  Reduction  of  capital  stock 25  IT 

5144  Rights  of  shareholders  at  elections 26  18 

5145  Election  of  directors 27  19 

5-146     Qualifications  of  directors 28  19 

5147  Oath  required  from  directors 29  20 

5148  Vacancies  in  board,  how  filled 30  20 

5149  Proceedings  if  no  election  of  directors  is  held 31  21 

5150  President  must  be  a  director 32  21 

5151  Individual  liability  of  shareholders 33  22 

5152  Personal  liability  of  executors,  trustees.  <fcc 34  23 

5153  Depositaries  of  public  moneys  35  23 

5154  Conversion  of  State  into  National  banks 36  24 

5155  State  banks  having  branches 37  25 

5156  Rights  of  associations  organized  under  Act  of  1863 38  25 

5157  Laws  applying  to  National  banks 39  26 

5158  United  States  bonds  defined 40  26 

5159  United  States  bonds  to  be  deposited 41  46 

5160  Increase  and  decrease  of  capital  and  bonds 42  26 

5161  Exchange  of  coupon  bonds 43  27 

5102     Transfer  of  bonds  to  and  by  Treasurer 44  27 

5163  Registry  of  bond  transfers 45  28 

5164  Association  to  be  advised  of  transfers 46  28 

5165  Comptroller  and  Treasurer  to  have  free  access  to  bonds 47  28 

5166  Annual  examination  of  bonds 48  29 

5167  Bonds  held  as  security  for  circulation 49  29 

5168  Comptroller  to  determine  if  association  is  entitled  to  commence 

business 21  15 

5169  Certificate  of  authority  to  commence  business 22  15 

5170  Publication  of  certificate  of  authority 23  16 

5171  Delivery  of  circulation  to  associations 50  30 

5172  Printing  of  circulating  notes,  denominations,  &c 51  31 

5173  Plates  and  dies  and  expenses  of  Bureau 52 

5174  Annual  examination  of  plates  and  dies 53  32 

5175  Issue  of  small  notes  limited 54  33 

5176  Amount  of  circulation  limited 55  33 

5177  Aggregate  amount  of  circulating  notes 56  33 

5178  Apportionment  of  circulating  notes .".7  33 

5179  Distribution  of  circulating  notes 58  34 

5180  Withdrawing  excess  of  circulation 59  34 

5181  Removal  of  associations 60  35 

5182  Circulating  notes,  for  what  receivable 61  35 

5183  Issue  of  other  notes  prohibited 62  36 


224 

Section  of  U.  S. 

Rev.  Stats.  Par.  Page. 

5184  Destroying  and  replacing  mutilated  notes G3  36 

5185  National  gold  banks G4  37 

5186  Reserve  required  of  gold  banks 65  38 

5187  Penalty  for  unlawfully  countersigning  and  delivering  notes...   135  76 

5188  Penalty  for  imitating  National  bank  notes 66  38 

5189  Penalty  for  mutilating  notes.  &c 67  38 

5190  Place  of  business 68  39 

5191  Requirements  as  to  lawful  money  reserve 69  39 

5192  Redemption  cities  and  reserve  required 70  40- 

5193  U.  S.  certificates  of  deposit  as  reserve 71  40 

5194  Issue  of  U.  S.  certificates  of  deposit 72  41 

5195  Redemption  of  circulating  notes 73  41 

5196  National  bank  notes  a  legal  tender 74  42 

5197  Rate  of  interest  limited 75  42 

5198  Penalty  for  taking  usurious  interest 76  45 

5199  Dividends  and  surplus  fund 77  44 

5200  Liabilities  to  bank  for  money  borrowed 78  44 

5201  Associations  not  to  loan  on  own  stock 79  45 

5202  Limit  of  indebtedness  of  association 80  45 

5203  Circulating  notes  not  to  be  hypothecated 81  46 

5204  "Withdrawal  of  capital;  dividends;  bad  debts 82  46 

5205  Enforcing  payment  of  capital  stock 83  47 

5206  Associations  not  to  pay  out  uncurrent  notes 84  48 

5207  U.  S.  or  National  bank  notes  as  security ;  penalty 136  77 

5208  Penalty  for  falsely  certifying  checks 85  48 

5209  Penalty  for  embezzlement 137  77 

5210  List  of  shareholders 86  49 

5211  Reports  of  associations  to  Comptroller 87  50 

5212  Reports  of  dividends,  &c 88  50 

5213  Penalty  for  failure  to  make  reports 89  51 

5214  Duty  on  circulation 90  51 

5215  Semi-annual  return  of  circulation 91  51 

5216  Assessment  if  return  is  not  made 92  52 

5217  How  tax  may  be  collected 93  52 

5218  Refunding  excessive  duties 94  52 

5219  Provisions  relative  to  State  taxation 95  53 

5220  Voluntary  liquidation 99  59 

5221  Notice  of  intention  to  liquidate 100  59 

5222  Deposit  to  redeem  circulation 101  60 

5223  Consolidating  banks  need  not  make  deposit 102  61 

5224  Reassignment  of  bonds,  redemption  of  notes,  &c 103  62 

5225  Destruction  of  redeemed  notes 104  62 

5226  Mode  of  protesting  notes 105  63 

5227  Examination  by  special  agent 106  63 

5228  Not  to  do  business  after  protest  of  notes 107  64 

5229  Redemption  of  notes  at  Treasury 108  64 

5230  Sale  of  bonds ;  the  U.  S.  to  have  lien  on  assets 109  65 


225 

Section  of  U.  S. 

Kev.  Stats.  Par.  Page. 

5231  Sale  of  bonds  at  private  sale 110  65 

5232  Disposition  of  notes  redeemed  by  Treasurer Ill 

5233  Cancellation  of  notes 112  66 

5234  Appointment  and  duties  of  receiver 113  66 

5235  Advertisement  of  Comptroller  to  creditors 114  67 

5236  Dividends  to  creditors 115  67 

5237  Injunction  on  receivership 116  68 

523S     Receivership  tees,  expenses,  &c , 117  69 

5239     Violation  of  title:  penalty ;  how  determined 118  69 

I     Bank  examiners ;  duties,  powers,  &c 96  57 

5241  Limitation  of  visitorial  powers 97  58 

5242  Insolvent  banks  ;  transfers,  assignments,  &c,  void j  ^  j;* 

5243  Use  of  word  ••  National  "  in  title 98  58 

5413     Obligations  of  the  U.  S.  defined  138  78 

5415     Penalty  for  counterfeiting  National  bank  notes 139  78 

5430  Penalty  for  using  plates,  false  plates,  notes,  &c 140  79 

5431  Penalty  for  passing,  selling,  &c,  counterfeits 141  80- 

54g2     Penalty  for  taking  impressions  of  implements,  tec 142  80- 

5433  Penalty  for  having  impressions  of  implements.  &c 143  81 

5434  Penalty  for  buying  and  selling  counterfeits,  kc 144  81 

5437     Penalty  for  officers.  kc.  using  notes,  kc.  of  closed  banks 145  81 

7     Penalty  for  receiving  public  moneys,  unless  depositary 146  82 

INDEX    OF   ADDITIONAL   ACTS. 

Act  of  June  20,  1874. 

Section.  Par.  Page. 

1  The  National  Bank  Act 156  87 

2  Lawful  money  reserve  on  circulation  abolished 157  88 

3  Redemption  fund ;  redemption  of  notes 158  88 

4  Retiring  circulation  and  withdrawing  bonds 159  90- 

5  Charter  numbers  of  banks  to  be  on  notes 160  91 

6  Amount  of  United  States  notes  to  be  kept  in  circulation 161  91 

7  Withdrawal  of  $55,000,000  of  circulation 162  91 

8  Bonds  to  be  sold  on  failure  to  return  circulation 163  92" 

9  Issue  of  new  notes  for  those  withdrawn 164  93 

Extract  from  Act  of  June  23,  1874. 

1       Notes  to  be  destroyed  by  maceration 165  94 

Act  of  January  14.  1875. 

1  Silver  coins  to  redeem  fractional  currency 166  94 

2  Charge  for  coining  gold  bullion  repealed 167  94 

3  Repeal  of  limit  of  circulation,  kc. ;  redemption  of  legal  tender 

notes 168  94 

Art  of  January  19,  1* 7.". 

1       Repeal  of  limit  on  National  gold  bank  circulation 169  96 

17 


226 


Extract  from  Act  of  February  8,  1875. 

Section.  Par.  Pago. 

15,  19     Tax  on  checks,  notes  of  State  bunks.  &c 170       96 

20  Tax  on  notes  of  State  banks,  cities.  &c 171       97 

21  Returns  to  Commissioner  of  Internal  Revenue 172       9*7 

Extract  from  Act  of  February  18,  1875. 

Correcting  errors  in  Revised  Statutes  of  U.  S 173       97 

Act  of  February  19,  1875. 

1       Compensation  of  National  bank  examiners 174       99 

Act  of  June  23,  1874. 

Stamping  unstamped  checks,  &c. ;  limit 175  100 

Extract  from  Act  of  February  18,  1875. 

Unstamped  instruments 176  101 

Act  of  June  30,  187G. 

1  Receiver,  for  violation  of  law,  insolvency.  &c 177  101 

2  Enforcement  of  individual  liability  of  shareholders 178  102 

3  Agent  to  manage  affairs  of  failed  bank;  election,  powers,  &c.  179  102 

4  Sale  of  stock  of  shareholders  not  paying  assessment 180  K>4 

5  Stamping  counterfeit  notes 181  104 

6  Savings  banks,  &c,  to  make  reports 182  105 

Extract  from  Act  of  March  1,  1879. 

22  Abating  semi-annual  duty  of  insolvent  banks 183  105 

Act  of  February  14,  1880. 

Conversion  of  National  gold  banks 184  106 

Act  of  February  26,  1881. 

Verification  of  returns  of  National  banks 185  106 

Act  of  July  12,  1882. 

1,2      To  extend  corporate  existence 186  107 

3  Special  examination  of  extended  banks 187  108 

4  Privileges,  liabilities,  &c,  of  extended  banks;  jurisdiction  of 

suits 188  103 

5  Withdrawal  of  shareholders;  preference  in  allotment  of  new 

shares 189  109 

6  Extended  banks;  old  and  new  notes,  lawful  money  deposit 190  109 

7  Requirements  as  to  banks  not  extending 191  110 

8  Minimum  bonds  for  banks  with  capital  of  $150,000  or  less 192  111 

9  Retiring  circulation  and  reissue * 193  111 

10  Amount  of  circulation  on  U.  S.  bonds 194  112 

11  Concerning  three  per  cent,  bonds 195  113 

12  Gold  and  silver  certificates,  clearing-house  restrictions 196  113 

13  Penalty  for  illegal  issue  of  certified  checks 197  114 

14  Congress  may  alter  and  amend 198  114 

Extract  from  Act  of  March  3,  1883. 

1       Repealing  tax  on  circulation  and  deposits  of  banks 199  115 


22 


approved  Starch  29,  1886. 

Section.                                                                                                                         Par.  Page. 

1       Receivers  to  protect  equities  in  real  estate,  &c 200  115A 

Receiver's  report  must  be  approved 201  115A 

3       Payment  for  property  to  be  made  by  Comptroller '202  115  B 

Act  of  May  1,  1886. 

1  Increase  of  capital  stock 203  11  jB 

2  Change  of  name  and  location 204  llu  B 

3  Liabilities,  &c,  under  old  name 205  L15C 

4  New  name  or  location  not  to  release  from  liabilities 206  115C 

Act  approved  March  3,  188T. 

1  Requirements  to  become  reserve  city 207  115C 

2  Requirements  to  become  a  Central  Reserve  City 208  115D 

3  Redemption  of  U.  S.  notes  at  San  Francisco 209  115D 

4  National  banks  deemed  citizens  of  States  in  which  located...  210  115D 

Extract  from  an  Act  approved  July  30.  1886. 

5  Limitation  of  banking  under  Territorial  law 211  115E 


A.  S.  PRATT  &  SONS, 

National  Bank  Agents, 

WASHINGTON,  D.  C. 


BANK   AGENCY. 

Established  in  1867,  we  have  for  twenty  years 
acted  as  Agents  of  National  Banks  at  the  U.  S. 
Treasury  Department  in  examining  Bonds  and  count- 
ing and  witnessing  the  destruction  of  Mutilated  Notes 
to  the  entire  satisfaction  of  those  we  represent. 

GOVERNMENT   BONDS. 


We  buy  and  sell  Government  Bonds  at  Market 
rates;  substitute  new  U.  S.  for  "Called"  bonds,  or 
deposit  legal  tender  notes  to  retire  all  or  any  portion 
of  a  Bank's  circulation. 

COLLECTIONS. 


Collections  made  and  remitted  at  usual  rates. 
CLAIMS. 

Special  attention  given  to  claims  and   business   be- 
fore the  various  Departments  of  the  Government. 

WE     SOLICIT     CORRESPONDENCE     WITH     PARTIES     CONTEM- 
PLATING   ORGANIZING    NATIONAL    BANKS. 


OFFICES,  THE  SUN  BUILDING, 

1315-1317  F  Street. 


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